What's new
　　Last week, Harmony was trading around 7.2x P/E, its lowestpoint since January. Besides, its fundamentals rebounded asBMW keeps climbing and its independent after-sales servicesstood out.
　　Comments
　　Cheapest point emerges, valuation ready to rebound.
　　The price of Harmony fell to HK$3.3 last week, representing——7.2x 2016e P/E and hitting its lowest point since January 10.
　　Compared to Zhongsheng, Yongda and Zhengtong, Harmonywas trading at a low P/E – our TP represents 9x 2016e P/E, thusvaluation is undemanding now and provides a sufficient marginof security. We believe Harmony's valuation has hit bottom, andit is ready to rebound.
　　Independent after-sales service to drive betterprofitability. Harmony continues to open independentafter-sales stores to strengthen and enlarge its comprehensiveafter-sales network. We expect its mature comprehensive storesto meet 15—— 20% growth per year and the new stores mightrealize profit within two years. With more stores maturing, theentire profitability of Harmony will be largely lifted.
　　BMW upcoming strong cycle to activate new catalyst.
　　Brilliance BMW sales enjoyed 18% YoY growth in 3Q16, and itsmonthly sales exceeded 30,000 in September, recording ahistorical high. With the launch of the new 5 Series, and localized1 Series and X3 in 2017, new car sales at BMW may beatexpectations activating a new catalyst for Harmony next year.
　　Valuation and recommendation
　　We maintain our earnings forecasts. We maintain a BUYrating, but cut our TP 21% to HK$4.2, implying 8.5x2017e P/E.
　　Risks
　　Lower-than-expected profitability in new stores.