Once again, the business innovation company wants to raise 900 million yuan to lay out new businesses such as medical services. We judge that medical services are the focus of the company's future layout, and we are strongly optimistic. In 2015, the company proposed incorporating “entering the field of medical services” into the core strategy for the next ten years, moving from PPP projects to the field of medical services. In November of last year, the company announced a fixed increase plan to issue no more than 80 million shares and raise 900 million yuan in capital. The majority shareholder Deng Guanhua subscribed for some of the shares, of which 600 million yuan will be used for the PPP project for hierarchical diagnosis and treatment in the Chenzhou region. The company has now signed a PPP model cooperation contract with the Yizhang County Traditional Chinese Medicine Hospital for the overall relocation project. The contract period is over 30 years. The newly built Yizhang County Hospital of Traditional Chinese Medicine aims to meet the standards of Class II A traditional Chinese medicine hospitals. The new Yizhang County Hospital of Traditional Chinese Medicine has 600 open beds, and is designed for 300,000 outpatient visits and 30,000 annual discharges. Last year, the company signed a framework agreement with the Beihu District People's Government of Chenzhou City to cooperate to build the Chenzhou Third People's Hospital project. At the same time, the company introduced a team of experts with successful experience in hospital management and advanced foreign enterprise medical management concepts, and acquired Guangzhou Huiqiao to quickly gain experience in hospital informatization management. The company will focus on medical services as its strategic center in the future, and there are extended expectations for the future. The medical service sector is one of the most prosperous fields in the pharmaceutical field. In the future, medical revenue will grow faster than pharmaceuticals. In 2014, the medical revenue growth rate of public hospitals was 16.3%, 4 percentage points higher than the drug growth rate of 12.1%. In the future, the share of medical revenue reflecting the value of doctors will continue to rise, the volume and price of medical services will rise sharply, and revenue will continue to grow faster than pharmaceuticals. Good at business innovation In the past, the company successfully expanded in vitro diagnostics. In 2011, the company entered the testing field and acquired Hangzhou Longxin and Yang Pu Nanxiong. The company's in vitro diagnosis went from scratch, from small to large. In vitro diagnosis revenue was less than 60 million yuan in 2011, and increased to 220 million yuan in 2015. The company has now established the Guangzhou Yangpu Medical Laboratory to enter the field of diagnostic services such as genetic testing. The company's successful business expansion in the field of in vitro diagnostics shows that management has strong business innovation capabilities. The majority shareholders' share increase of 15.98 yuan/share shows confidence in development. In July of this year, Mr. Deng Guanhua, the majority shareholder, completed a plan to increase the company's share holdings through “Ruixiang No. 2”. The cumulative increase of shares was 6,265,675 shares, with an average increase of 15.98 yuan, amounting to 100 million yuan, demonstrating confidence in the company's development. After the increase in holdings, Mr. Deng Guanhua and his co-actors held a total of 102,613,251 shares of Yangpu Medical shares, accounting for 33.23% of the company's total share capital. The main business is stable and there is still room for growth. In 2015, the terminal market for low-value consumables in China exceeded 110 billion yuan, with a growth rate of about 24%, corresponding to the production-side market of about 50 billion yuan. Despite intense competition, the industry space is still huge, and vacuum blood collection vessels can maintain steady growth. The first coverage gives an “gain” rating. We expect EPS to be 0.14, 0.19, and 0.23 yuan respectively in 16-18. Considering the company's small market capitalization, high performance flexibility, and extended expectations, entering medical services can enjoy a valuation premium. Referring to comparable company valuations, we gave the company 120 times PE in 2016, with a target price of 16.78 yuan. For the first time, coverage was given to an “increase in weight” rating. Risk warning. There is a risk of a decline in IVD performance, pressure to reduce product prices, and the progress of the medical service business falls short of expectations.