Investment highlights: Event: On the evening of April 28, the company released its report for the first quarter of '16. Revenue for the reporting period was 1,038 billion yuan, up 11.50% year on year, and net profit was 33 million yuan, up 2314.77% year on year. It is estimated that the company's net profit from January to June 2016 was 53 million yuan to 64.5 million yuan, an increase of 121.49% to 169.55% over the same period last year. Comment: The first quarter and half-year results are generally in line with expectations. The company's revenue for the first quarter of 2016 was 1,038 million yuan, up 11.50% year on year, and net profit was 33 million yuan, up 2314.77% year on year. It is estimated that the company's net profit from January to June 2016 was 53 million yuan to 64.5 million yuan, an increase of 121.49% to 169.55% over the same period last year. In the review of the company's annual report, we predict that the pharmaceutical sector will contribute 600 million yuan in net profit and 160 million yuan in the chemical sector in the full year of 2016. We believe that the company's first quarter and semi-annual results are generally in line with expectations. Viscose staple fiber prices continue to rise, and 2016 performance is expected to increase significantly. We believe that the company's profit situation of viscose staple fiber in 2016 is expected to surpass that of 2015. The main reason is: (1) The price of viscose staple fiber in 2015 started a rebound from around 11,500 yuan/ton, and only reached the level of 13,500 yuan/ton until August of the middle of the year. After reaching a high of 15,000 yuan/ton, the company's profit declined rapidly, so the company's profit improved significantly from the third quarter. The price of viscose staple fiber rebounded rapidly in 2016 after falling to a low of 12,000 yuan/ton, and has now rebounded to over 14,000 yuan/ton in about 4 months. (2) As Xiaoshan Fulida discontinued production capacity of 180,000 tons at the end of the second quarter and was relocated, industry supply is expected to continue to shrink in the short term, and product prices are expected to hit the high level of 15,000 yuan/ton again. (3) The new production capacity in 2016 was very limited. The supply and demand pattern of the industry continued to improve, the overcapacity situation gradually eased, the operating rate of the industry remained high, and the profit time of enterprises increased significantly compared to last year. With the acquisition of the remaining 25.07% of Australian-Pacific Hospital's shares, the share of medical service profits increased further. The company plans to use 1209.27 million yuan to acquire the remaining 25.07% of Aoyang Hospital's shares, corresponding to an overall valuation of 483 million yuan, corresponding to 14PE 31 times, according to the calculation of Australian Ocean Hospital's net profit of 154.675 million yuan in 2014, corresponding to 14PS 0.84 times, and the purchase price is reasonable. The purchase price is reasonable. After the acquisition is completed, the company will hold 100% of Aoyang Hospital's shares. Profit forecast and investment advice: We expect the company's pharmaceutical sector to contribute 60 million yuan in net profit and 160 million yuan in chemical sector in 2016. Net profit for 16-18 is estimated at 2.2, 270, and 300 million yuan, corresponding to EPS of 0.32, 0.38, and 0.43 yuan. Considering the overall valuation of comparable companies in transformation and rehabilitation, 38 times PE in 16 years, the company is given a target price of 12.00 yuan, corresponding to 16-18 PE38, 32, and 28 times, increasing its holdings rating. Major uncertainties: risk of medical malpractice, risk of viscose staple fiber prices falling short of expectations.