Interim Report Summary: In the first half of 2014, the company achieved total revenue of 1,382 million yuan, an increase of 8.02% over the same period last year; achieved operating profit of 160 million yuan, an increase of 29.12% over the same period last year; and realized net profit attributable to owners of the parent company of 109 million yuan, an increase of 33.35% over the same period last year. Key points of the review: The pharmaceutical business is gradually emerging from the shadow of the “Chaoluning” quality crisis, and cost control is driving up short-term profits. The sales volume of the company's main product, “Maolonin” injection, has been declining since the quality crisis in 2012. In the first half of the year, sales revenue from traditional Chinese medicine products declined only slightly year-on-year, indicating that the company is emerging from the quality crisis. Thanks to the reforms of the raw material supply chain and marketing team that began last year, the year-on-year growth rate of the company's pharmaceutical business operating costs and sales expenses was lower than revenue, which increased the profits of the company's pharmaceutical business in the short term. We expect that as reforms deepen, the company's traditional pharmaceutical business will return to normal operating trajectory. The growth rate of medical services is slowing down, and increasing the added value of medical services is the key. The growth of the company's medical services in the first half of the year was lower than in the same period. On the one hand, Yizheng Hospital was incorporated into the list last year, which brought about a significant increase in revenue; on the other hand, the new building began to accrue depreciation, which dragged down profits. However, technical and management guidance from Gulou Hospital has effectively reduced the company's operating costs and increased gross profit margin. It is expected that as hospital radiation coverage expands and medical service revenue rises, the company's technical and management advantages will bring higher profit added value. The equity transfer further clarifies the management relationship. In March of this year, Jinling Group, the holding parent company, transferred its shares to Xingong Group free of charge. This transfer is conducive to reducing the company's decision-making level, improving management efficiency, and providing institutional support for further development. Risk analysis: The development of medical services falls short of expectations; the traditional Chinese medicine business has been slow to resume growth. Profit forecast and investment value: We expect the company's 2014-2016 EPS to be 0.37 yuan, 0.42 yuan, and 0.48 yuan, respectively, with corresponding price-earnings ratios of 36.71, 32.39, and 28.63. Refer to comparable company valuations, and downgrade the rating to “increase holdings”.