Guide to this report: The company actively expands new business, lays out the fields of medical informatization, medical service management and genetic testing, actively seeks strategic targets overseas, enhances long-term competitiveness, and maintains an increase in holdings rating. Incident: The company announced an investment of 200 million yuan to establish a joint venture project company with the Yizhang County Government. The company held 83.33% of the shares and was responsible for the overall relocation of the Yizhang County Traditional Chinese Medicine Hospital. Comment: Consolidate resources, transform into a comprehensive service company, and maintain an increase in holdings rating. New products such as POCT are still in the investment period. The original blood collection business was affected by price cuts in tenders. Short-term company performance is still under pressure, maintaining the 2016-18 profit forecast EPS of 0.14/0.17/0.19 yuan. The company actively expands new business, lays out the fields of medical informatization, medical service management and genetic testing, actively seeks strategic targets overseas, enhances long-term competitiveness, maintains an increase in holdings rating, considers the company's forward-looking layout in hot fields, grants a certain premium, and maintains the target price of 19.97 yuan. The PPP project of Yizhang County Hospital of Traditional Chinese Medicine is progressing gradually. The overall relocation project of Yizhang County Hospital of Traditional Chinese Medicine is the company's first medical PPP project, with a total investment of 300 million yuan, a new second-tier hospital, 600 beds, design 300,000 outpatient visits per year, and 30,000 discharges per year. At present, the bidding process for the project has been completed. This time, a supplementary agreement has been passed to establish a project company as a joint venture with the government, which is conducive to clarifying the legal and financial entities of the project, binding government investment, speeding up project progress, and exploring new business at the same time. The registration capital requirements of both parties are required to be in place within 90 days, and it is expected that the project will advance soon. The P2P model explores the healthcare industry. According to the agreement between the company and the Yizhang County Government, the future profit model of the project company includes: 1) Stable operating and management fees, calculated according to the amount of capital invested. The standard is a 20% increase in interest rates on the five-year benchmark loan. 2) Revenue from exclusive supply chain management rights, including pharmaceuticals, consumables, equipment and logistics, etc. The Yizhang Traditional Chinese Medicine Hospital project includes 10 years of operation of the old hospital plus 30 years of operation of the new hospital. Jointly build trusteeship hospitals and implement a modern hospital management model, and the company takes the lead. With a stable management fee+supply chain management model, the company obtains stable management profit returns, and also brings sales channels for self-produced and agent products. We expect the ROE to exceed 10% after completion of the project. Driven by hierarchical diagnosis and treatment, the number of patients will increase, and returns will gradually increase. The company is actively expanding new business and seeking additional volume overseas. The company is actively expanding new business: (1) acquired Guangzhou Huiqiao Computer Technology Co., Ltd. and laid out medical informatization; (2) signed PPP cooperation framework agreements with Chenzhou Third People's Hospital and Yizhang County Hospital of Traditional Chinese Medicine to enter the medical service field; (3) set up a medical testing company to carry out genetic testing business. In 2016, the company focused on strategic expansion and actively sought overseas mergers and acquisitions opportunities at home and abroad. Currently, it has established a relatively complete merger and acquisition process and a project bank of a certain scale in line with the company's development strategy, and is currently screening and negotiation of projects. Risk warning: The profit cycle of medical services is long; the risk of collection of accounts receivable.