Incident: On March 2, 2017, the company issued an announcement on increasing its shareholding. According to the announcement, 25 core managers, including Mr. Dou Qiling, chairman of the company, and Mr. Lang Hongping, general manager, completed an increase in the company's stock holdings by 159 million yuan. Comment: Executives increased their holdings by 159 million yuan, demonstrating management's high confidence in the strategic layout of major tumors: 25 core managers, including the company's chairman, Ms. Dou Qiling, and general manager, Mr. Lang Hongping, increased their holdings by 9.06 million yuan per share (accounting for 1.14% of the company's total share capital) by 17.50 yuan/share on March 2, 2017, for a total increase of 159 million yuan. The increase in executive holdings shows, on the one hand, that management is confident in the future strategic layout of major tumors (mainly divided into the two major sectors of pharmaceuticals and services), and that the company's subsequent performance growth and valuation increases can be expected; on the other hand, the company's executives have increased their holdings at the bottom of the stock price, which fully indicates that the current stock price has a certain margin of safety. A number of core anti-tumor drugs in the pharmaceutical sector have entered the new medical insurance catalogue, laying a solid foundation for performance in the tumor layout: in the pharmaceutical business, various drugs such as Loboplast, Aiyu, Liqi Revitalization Pills, Eddy, and Compound Canthardia have all entered the new medical insurance catalogue. Among them, Luopo, which has a sales space of 1.5 billion yuan, has lifted indication restrictions in the new version of the catalogue, and future sales growth is expected to remain above 50%; Ai Yu, which has 500 million sales space, currently sells only 13.62 million yuan, and is expected to use the medical insurance catalogue to achieve sales growth of more than 100%; the current sales of Liqi Huihuidi pills, which has 1 billion sales space, is only 210,000, and is expected to maintain a steady increase of more than 100% in the future; Eddy continues to remain in the medical insurance catalogue and is expected to maintain steady growth of 10% in the future; in the future, stable growth of 5% can be expected. “Rapid growth in varieties+steady growth in mature varieties” is conducive to stabilizing the sales growth rate of 10%-12% in the pharmaceutical sector, laying solid performance for the tumor layout. The layout of oncological medical services is gradually taking shape, and the company's valuation is expected to gradually increase in the future: in the medical service business, the company now has many hospitals in Guannan, Chaoyang, Fulin, 24 cancer treatment centers, and 7 doctor groups (distributed in Anhui, Tianjin, Liaoning, Hunan, Sichuan and other regions), and the oncology service layout is gradually taking shape. In 2017, the company is expected to continue to acquire hospitals and promote the layout of cancer treatment centers. Currently, the company's medical service business has not fulfilled the valuation required for high-end medical services (50 times PE). As the company's oncology service layout progresses, the company's valuation is expected to gradually increase. Profit forecast and valuation: The company's EPS for 16-18 is expected to be 0.51, 0.68, and 0.83 yuan respectively, and the corresponding PE is 37, 28, and 24 times, respectively. Considering the high growth trend of the company's oncology services and huge prospects in the service sector, it maintains a “highly recommended” rating, with a target price of 23.67 yuan. Risk warning: Drug sales fall short of expectations; risk of price reduction in drug tenders; layout and operation of cancer hospitals and cancer treatment centers falling short of expectations; company fee control falls short of expectations, etc.