Key investment points: The company has an order of 4.628 billion yuan for manual medical construction. The company's on-hand orders are expected to release results in the second half of the year. Among the many orders, the company's on-hand orders refer to projects that are about to be settled, are under construction, and can be started in the near future. The total revenue to be confirmed is 4.628 billion yuan, excluding PPP projects. Our statistical report found that the amount of the company's projects in the later stages (including the audit and settlement stage, completion and acceptance stage, mechanical and electrical installation stage, etc.) reached 1.46 billion yuan. It is expected that more revenue will be confirmed in the second half of the year, and the release of performance can be expected. Construction contract revenue in the first half of 2016 increased 75.23% year on year, a significant improvement over -65.07% in 2015. At the same time, medical specialty engineering increased by 44.28% year on year, which means that the implementation of the company's PPP projects accelerated, and it was gradually recognized as project revenue as the project progressed. PPP projects for hospital construction have entered an outbreak period. The goal of controlling 30 hospital PPP projects for 5 years has received government policy support, and PPP projects for hospital construction are entering a period of explosion. Currently, the company's hospital construction PPP projects involve 6 hospitals. Among them, Fuping Hospital of Traditional Chinese Medicine is about to open (the hospital's revenue is expected to reach 100 million dollars after completion, and 150 million in the following year), Dushan Hospital of Traditional Chinese Medicine (estimated annual revenue of 150 million yuan after completion), and Qinhuangdao Guangji Hospital (estimated annual revenue of 600 million dollars after completion) are under construction. In the hospital revenue structure, pharmaceuticals+consumables account for 60%, and the overall profit margin after logistics hosting services is 13%-15%. PPP projects can drive supply chain business and logistics hosting business. At the same time, the company introduced financial investment institutions such as banks to share financial risks. Compared with competitors, the company's financing model for hospital construction projects is more advantageous. Deeply participate in hospital management and build a medical service platform. When choosing a hospital, we first look at the regional population base, which generally requires 400,000 to 500,000 or more. Second, if you look at the hospital's cash flow, you need local finance to endorse it. In addition, it must also be a project to build or relocate an old hospital. They will not consider building a new hospital themselves, because the new hospital is slow to make a profit, and the hospital's original brand influence and technical team are valuable medical resources. Every PPP project of the company establishes a hospital management company with the local government. The medical management company dominates the hospital council and controls the operation and management of the hospital. In recognition of the old hospital team, the hospital management still uses the original management team, but personnel will be added later. At the same time, the local government will also cooperate more extensively with Shang Rong to entrust other hospitals to Shang Rong's management. The new hospital's personnel management uses the “old method for the elderly, new method for the new person”, and the management mechanism is flexible. In addition, the company cooperated with Lianying Film to supply Lianying medical imaging equipment for newly built hospitals, and plans to build a hospital imaging center. Profit forecast and valuation: Based on the company's current business situation, we estimate that the company's 16-18 EPS was 0.45, 0.68, and 0.93 yuan, respectively, corresponding to 52/34/25 times PE. Considering that the company's hospital had sufficient PPP orders and accelerated delivery, it was valued 34 times in 17 years. For the first time, it covered a “careful recommendation” rating, and the target price was 30 yuan. Risk Warning: Changes in national PPP policies; contract execution times and ratios fall short of expectations.