Investment highlights: Recently, the company announced interim results and exchanged business conditions with investors: 1. Driven by mergers and acquisitions, the company's mid-term financial data showed a growing trend. In the first half of the year, the company achieved operating income of 299 million yuan and net profit attributable to shareholders of listed companies of 48.87 million yuan, up 53.61% and 10.95% respectively from the previous year. During the reporting period, the transfer procedures for 45% of Desai's shares and 39% of Desai's products have been completed. The consolidated reporting ratios for Desai Systems and Desai products were 25% and 31% respectively in the first 5 months, and 70% in June. The total revenue contributed to the company in the first half of the year was 129 million yuan. Excluding mergers and acquisitions, the company's revenue increased -13% year over year. In terms of profitability, the consolidated gross margin was 53.91%, down nearly 8 percentage points from the previous year. It is expected to be affected by the gross margin of the consolidated reagent business. 2. The company's main business is based on biochemical diagnosis to further increase market share through acquisitions. After the acquisition of Desai, product lines complement each other, and the operation of two brands, which is conducive to expanding high-end customers. Looking at the division of business, the company's main business is still mainly biochemical diagnostic reagents. In 2012-2014, the sales revenue of in vitro biochemical diagnostic reagents accounted for 85.52%, 85.23%, and 90.19% of the current main business revenue, respectively. The first half of this year still accounted for more than 80% of the main business. The in vitro diagnostic reagents business achieved revenue of 242.56 million yuan, biochemical raw materials revenue of 6.73 million yuan, and instrument revenue of 45.52 million yuan. In vitro diagnostic reagents increased by 49.50% compared to the same period last year, and instrument revenue increased 82.58% over the same period last year. Currently, the biochemical sector still houses several hundred companies, which indicates that the industry has not yet reached the top. The company believes that in the future, there will be a competitive pattern where 4-5 companies account for most of the market share in the biochemical inspection sub-industry. The company's advantage is that the raw materials for reagents can be produced in-house, large-scale, and fully automated, reducing batch differences. It is expected that it will continue to maintain its leading edge in the industry. 3. In the future, the company will focus on promoting chemiluminescence immunoassay business. The company has both independent R&D brands and foreign cooperative brands. Chemiluminescence is the main development direction in the field of immunological testing. The domestic market size is about 5 to 6 billion yuan. Previously, it was mostly occupied by European and American companies. As the technological innovation of domestic companies continues to deepen, there is a gradual trend of import substitution. On the one hand, the company independently developed the CR1000 chemiluminescence immunoanalyzer, which went on the market in October last year. Currently, it has installed 40-50 units, and plans to install 150 units this year. Since chemiluminescence analyzers are closed, instrument sales can drive sales of subsequent reagents, and self-produced instruments are the key to competition. The company has obtained dozens of reagent product certificates, which basically cover commonly used projects. The annual sales of reagents driven by each instrument are estimated at 300,000 to 400,000 yuan. On the other hand, the IDS-iSys instrument and six reagent products cooperating with IDS have obtained the “Medical Device Registration Certificate” issued by the China Food and Drug Administration, greatly enriching the company's immunization product line. In terms of special projects, IDS's competitive advantage is in line with the company's self-developed models, and targets different target customers. Currently, more than 20 units have been installed. Through R&D cooperation, Lidman's 31 existing chemiluminescence reagents were adapted to IDS instruments. Both models of reagents can be used universally, thereby increasing profitability. 4. Layout the fields of molecular diagnosis and POCT. Molecular diagnostics is a bright spot for the future of the IVD industry. In 2013, biochemical diagnosis, immunological diagnosis, and molecular diagnosis markets accounted for 27%, 35%, and 8%, respectively. The growth rate of molecular diagnostics is expected to reach 15% in the next 5 years. It is expected that by 2018, the market share of biochemical diagnostics will drop to 10%, immunodiagnosis will remain 20-25%, and the market share of molecular diagnostics will exceed 30%. The POCT sub-sector, on the other hand, is growing at 15-16% per year, accounting for about 5% of the market. The company and ENIGMADIAGNOSTICS LIMITED jointly invested in the establishment of a joint venture to commercialize EnigmaML equipment systems and related diagnostic kit products, and gradually explore the field of molecular diagnostics. The EnigmaML system provides a fully automated solution integrating pre-processing, PCR testing, data processing and analysis, and data transmission for existing molecular diagnostics. It combines the high sensitivity of real-time fluorescence PCR reactions with the characteristics of POCT product detection, and has the advantages of fast, accurate, simple, and real-time data transmission. The first product can achieve multiple molecular and immunological diagnostic tests. Fully automated operation and intelligent interpretation reduce the requirements for personnel and the environment, and is expected to become the leading product for the trend of centralized testing in primary medical institutions in the future. In addition to the joint venture, the company itself also plans to develop more intelligent and simplified products based on the immunization business. The preferred direction is myocardial markers and chronic disease management. 5. The company attaches importance to research and development, and gradually increases R&D investment. The amount of R&D investment in the first half of 2015 was 16.3 million yuan, an increase of 36.90% over 11.9 million yuan in the same period last year. It accounted for 5.44% of operating income. The company has plans to gradually increase investment in research and development to a limit of no more than 10%. In the biochemical raw materials business, three R&D teams have now been set up, including diagnostic enzymes, antigens, antibodies, and chemicals. At present, the industrialization of 14 types of diagnostic enzymes has been completed, import substitution can be realized, and the genetic engineering construction of 13 diagnostic enzymes has been completed, and industrialization research is ongoing. In terms of chemiluminescence diagnostic kits, 17 luminescence reagent projects are being developed, covering five hepatitis B markers, which are currently in high clinical demand for immunodiagnostic reagents. In terms of instruments, the CM4000 fully automatic blood coagulation analyzer, corresponding coagulation reagents, and fully automatic biochemical analyzers are being developed; at the same time, Desai also has a POCT instrument and two fully automatic biochemical analyzers.