Investment highlights: Event: Overseas subsidiary Xi Long USA invested US$22.5647 million in Fulgent with its own capital, accounting for 15% of Fulgent's shares after completion; it invested 51 million yuan to establish Fujian Fujun Gene Technology Co., Ltd. with Shenzhen Fujin and Fujian Jinqiang, accounting for 51% of the shares. Fulgent has excellent qualifications and is a leading gene sequencing company. The company mainly provides genetic diagnosis services (including sequencing, risk assessment, professional genetic consultation, etc.) to hospitals or scientific research institutions. Its advantages over other gene sequencing and diagnosis companies are its authority (high degree of approval), wide coverage of the number of tests, and low cost. Fulgent has been certified by US CLIA and CAP standards, and is the world's highest enterprise that uses next-generation sequencing technology to perform DNA sequencing and gene copy number analysis. Many of its core personnel are highly qualified (HanLin Gao is an industry leader and top expert in next-generation DNA sequencing technology, etc.), so it is highly recognized in the market and is developing rapidly; Fulgent provides 4637 single gene tests and more than 170 multi-gene analysis and testing programs, mainly focusing on tumor genetic testing, and other rare disease testing services, including hemophilia, The number of tests for lateral sclerosis, fragile X chromosome, autism in children, etc., is in the leading position in the world, and the service also covers many countries and regions such as the United States, Canada, and Australia; Fulgent also has an advantage in terms of cost, reduced costs through independent research and development of analysis software and reagents, etc., and increased price competitiveness. Fulgent's 2015 unaudited net profit was US$4.213 million, which is at a relatively good level within the industry. Enter the field of genetic testing and promote strategic transformation. The company invested 15% of Fulgent's shares and invested in the establishment of Fujian Fujun Gene Company, and entered the field of genetic testing. Genetic testing is the foundation of precision medicine. It can not only track the pathways of infectious diseases, but also predict the risk of individualized diseases, effectively predict various diseases such as cancer, diabetes, and Down's syndrome. It has broad development space (tumor genetic testing market space has reached the level of 10 billion US dollars). By establishing a genetic company in China, the company can introduce Fulgent's technology into the country and promote the company's business transformation. At the same time, the company collaborates with the existing in vitro diagnostic reagents business. On the one hand, the genetic testing business can be expanded through diagnostic reagent channels, and on the other hand, the company's product line in the field of in vitro diagnostic reagents is further expanded, enhancing the company's competitiveness in the field of in vitro diagnostic reagents. Valuation rating: The company is a leading domestic chemical formulation enterprise, continuously optimizing product structure and continuously improving profitability. The epitaxial approach cuts into the blue ocean of the in vitro diagnostic industry, while also laying out medical devices, developing e-commerce platforms, and entering the field of genetic testing to promote transformation. Long-term development is promising. EPS is expected to be 0.49, 0.69, and 0.90 yuan in 15-17, and PE is 63, 44, and 34 times, maintaining the buying rating. Risk warning: The pace of progress of gene sequencing services is lower than expected, and the development of e-commerce platforms is lower than expected.