Key investment points: The company announced its 2016 annual report and 2017 quarterly report. The growth rate was in line with expectations. The company's 2016 revenue was 3.687 billion yuan, an increase of 11.64%, net profit of 385 million yuan, an increase of 103.22%, non-net profit of 368 million yuan, an increase of 114.74%, and an EPS of 0.486 yuan, in line with expectations. The company announced the 2016 profit distribution plan. It plans to distribute cash of 0.6 yuan (tax included) to all shareholders for every 10 shares, for a total of about 47.52 million yuan. No bonus shares will be given, and no capital will be transferred from the Provident Fund. At the same time, the company announced its quarterly report for '17, with revenue of 931 million yuan (+26.37%), net profit of 100 million yuan (+22.27%), net profit of 100 million yuan (+22.27%), deducted non-net profit of 93.35 million yuan (+17.88%), and EPS of 0.127 yuan, in line with our expectations. The growth rate of core products in the pharmaceutical industry sector is steady. 2017 benefited from the adjustment of the medical insurance catalogue, and the net profit growth rate is expected to exceed 12%. In 2016, the company's operations stabilized and rebounded rapidly. The pharmaceutical industry sector grew steadily, with core anti-tumor drug revenue of 1.88 billion (+10.68%), accounting for 51%, gross profit margin of 93.44%; cardiovascular drug revenue of 512 million (+3.69%), accounting for 14%, gross profit margin 84.59%; gynecological drug revenue of 298 million (+1.21%), accounting for 8%, gross profit margin of 61.79%; OTC product revenue of 295 million (+3.23%), accounting for 8%. The core anti-tumor drug type, Eddy injection, is expected to sell more than 1.4 billion dollars in terminal sales in 2016, a growth rate of about 10%, and the sales volume of Lobab terminals is about 450 million, a growth rate of more than 80%. At the same time, the company has nearly 10 second-tier products with sales volume exceeding 100 million yuan, which is expected to continue to gain strength in 2017. The first quarter was affected by factors such as the Spring Festival and tenders, and the pharmaceutical industry accounted for a low share of the whole year. It is expected that 2017 will benefit from the adjustment of the medical insurance catalogue and maintain a high growth rate: in the past, the first-tier variety Eddy (exclusive, medical insurance treatment drug list) is expected to maintain a steady growth rate above the industry average (6-8%); the second-tier star Luoplin (exclusive, medical insurance category B) is expected to maintain a high growth rate of more than 60% in 2017; it is expected that the release of Qi-promoting pills (cardiovascular drugs, exclusive, medical insurance category B) will begin. The pharmaceutical industry sector will grow rapidly in the future, driven by new core varieties. The net profit growth rate of the pharmaceutical industry sector is expected to exceed 12% in 2017. Medical services are growing rapidly, creating the largest oncologist/medical group. The company actively laid out the field of oncology medical services and established the first A-share oncologist/medical group. So far, the company has set up 5 cancer hospitals (Guannan, Chaoyang, Bijie, Binhai, Fulin), 27 oncology centers, 7 doctor groups, and 1 3 billion oncology industry fund. In 2016, medical service revenue was 496 million yuan (+98%), with an estimated net profit of 70 million yuan, and a comprehensive net interest rate of about 14%. According to the company's business plan, medical services are expected to achieve revenue of 890 million yuan in 2017 and are expected to contribute more than 100 million yuan in net profit. Expense ratios declined significantly during 2016 and the first quarter of 2017, and gross margin declined slightly due to the impact of medical services. The gross profit margin for 2016 was 76.46%, -4.39 percentage points, mainly affected by factors increasing the share of the medical service business; the period expense ratio was 61.95%, -11.02 percentage points, of which the sales expense ratio was 49.82%, -12.09 percentage points, mainly due to the high base in 2015 and the remarkable cost control results in 2016; the management expense ratio was 10.51%, +1.06 percentage points, financial expenses ratio 1.61%, +0.01 percentage points, operating cash flow per share, 0.48 yuan ,33.65%, mainly Due to the increase in purchase payments and procurement expenses of the newly merged Chaoyang Hospital. The gross profit margin for the first quarter of 2017 was 73.07%, -7.74 percentage points; the period expense ratio was 58.22%, -8 percentage points, of which the sales expense ratio was 46.53%, -8 percentage points, the management expense ratio 9.54%, -0.4 percentage points, the financial expense ratio was 2.15%, +0.39 percentage points, and the operating cash flow per share was 0.38 yuan, +43%, mainly due to the increase in sales repayment, and the trend in business conditions was good. Promote core pharmaceuticals, expand the cancer treatment ecosystem, and maintain an increased rating. The company “focuses on large tumors”, the pharmaceutical industry is growing steadily, and at the same time building a “Yibai characteristic” oncology medical/doctor group, it is expected that the “oncology drug+oncology medical service” industry chain integration will eventually be realized, expanding the cancer treatment ecosystem, and the potential for future development is huge. According to the company's 17-year business plan, considering only the endogenous development of medical services, we slightly lowered the 17-18 EPS of 0.66 yuan and 0.83 yuan to 0.62 yuan and 0.78 yuan. The first forecast was EPS of 0.98 yuan in '19, an increase of 28%, 26%, and 25%. The corresponding price-earnings ratios were 26 times, 21 times, and 17 times, respectively; maintaining an increase in holdings rating.