Event: On October 29, 2016, the company released its performance forecast for the third quarter of 2016. From January to September this year, the company achieved sales of 933 million yuan, an increase of 95.6% over the previous year. Net profit of the mother was 167 million yuan, an increase of 161% over the previous year. The company's business conditions are good and its performance is steady. Real estate is picking up, and growth is obvious: in 2016, the company's real estate business was affected by the loose monetary environment and policy environment, and operating income increased in the first half of 2016. While housing prices in Tier 1 and 2 and surrounding cities are rising, housing turnover in some hot city markets has reached record highs. In the first half of the year alone, the operating income of the real estate business exceeded that of the whole of 2015, up 688% year on year. We expect this growth to decline in the second half of the year, but it remains at a high level, and the sector's growth rate is expected to reach 400%. In response to the national capacity removal policy, the mining trade business was gradually divested: With the country's overcapacity, the company's coal mining business revenue declined year by year, and gross margin decreased year by year. Mining trade revenue fell 80% year on year in the first half of 2016, and gross margin was only 0.41. The decline in mining trade revenue is due not only to the country's overcapacity, but also to the gradual divestment of mining trade business by enterprises. In March 2016, Zhongzhu Medical signed an agreement to transfer its subsidiary Xihai Mining Investment Co., Ltd. The company will gradually divest the mining trade business, and it is expected that this portion of operating income will continue to decline. Acquisition of Integrated Healthcare and layout of the oncology industry: In September 2015, Zhongzhu Medical signed an equity transfer agreement with Integrated Medical. In February 2016, Zhongzhu Medical completed the 100% equity transfer procedure for Integrated Healthcare, and completed the issuance of a total of 130 million RMB common shares to Integrated Healthcare. Through the acquisition of integrated medicine, the company expanded its medical device business and expanded its presence in the field of cancer treatment. In the first half of 2016 alone, the business in this field brought revenue of 120 million yuan to Zhongzhu Medical. With the increase in the number of new oncology cooperation centers built by Zhongzhu Medical and the increase in its medical device sales volume, according to the performance of integrated medicine over the years, it is expected that the growth of the medical device sector will remain at 15%-25%. The employee stock ownership plan was successfully completed: The company started the employee stock ownership plan in April 2016, and as of September 30, 2016, the employee stock ownership plan had completed the stock purchase. The average transaction price is about 17.98 yuan/share, and the number of shares purchased currently accounts for 6.96% of the company's total share capital. Establish a benefit-sharing mechanism between employees and enterprises through employee stock ownership plans to effectively motivate employees and enhance the company's cohesion and competitiveness. Profit forecast and investment rating: We forecast that the 2016-2018 operating income of Zhongzhu (600568) will be 1.5 billion, 2.65 billion and 3.32 billion yuan respectively, and net profit attributable to the parent company will be 217 million, 387 million yuan and 508 million yuan; equivalent to 2016-2018 EPS of 0.31 yuan, 0.54 yuan, and 0.71 yuan respectively; corresponding PE is 74, 42 and 32 times, respectively. Zhongzhu Medical is not only a medical device and pharmaceutical company; its real estate business has continued to rise in recent years. This part of the business can bring considerable revenue to the company, and can also provide cash flow for the development of medical devices and pharmaceuticals. Both parties promote each other, so for the first time, we have given an “increase in holdings” rating. Risk warning: Real estate is affected by national policy regulation, and prices and sales volume are unstable, leading to a sharp decline in profit; the risk that instrument sales will not reach the expected growth rate; the risk that the construction period of the project will be extended, which will affect earnings;