Incident: The company's overseas subsidiary, Xi Long USA, Inc. (hereinafter “Xi Long USA”) signed a framework agreement with Fulgent Therapeutics LLC (hereinafter referred to as “Fulgent” or “Target Company”) shareholder Ming Hsieh. The agreement agreed that Xi Long USA would invest 22,564,700 dollars in Fulgent with its own capital and acquire Fulgent shareholders Ming Hsieh and Ray Yin, Hanlin Gao, and Joe Roach transferred 7905,405 shares and subscribed to Fulgent's newly issued D2 preferred shares. After the transaction is completed, Xi Long USA will hold 15,810,810 shares of the target company, accounting for 15% of the total number of shares in the target company. The company signed a “Cooperation Agreement on Joint Investment and Establishment of Fujian Fujun Gene Technology Co., Ltd.” (hereinafter referred to as the “Cooperation Agreement”) with Shenzhen Fujin Gene Technology Co., Ltd. (hereinafter referred to as the “Cooperation Agreement”). The company invested 51 million yuan, Shenzhen Fujin invested 30 million yuan, and Fujian Jinqiang invested 9.5 million yuan to jointly establish Fujian Fujun Gene Technology Co., Ltd. Comment: Fulgent is the company that provides the NIH with the largest number of genetic tests, serving all over the world. Fulgent is a standardized genetic testing service organization for clinical molecular diagnosis certified by CLIA and CAP in the United States. It provides the most comprehensive genetic testing services to the world with a large genetic database and top technical equipment. Fulgent is the agency that provides the largest number of genetic tests in the genetic testing database system of the US National Health Agency NIH, which is the most authoritative source of all reagents, serving many countries and regions in the United States, Canada, Australia, Europe, South America and Asia. Fulgent Diagnostics is also the world's most advanced company that uses next-generation sequencing technology for DNA sequencing and gene copy number analysis, and provides professional genetic consulting services. Its main business is: single-gene testing (providing 4,637 single-gene testing items), multi-gene combination analysis (providing more than 170 testing items), exon testing, special testing for cancer genes, and providing testing services other than second-generation sequencing. This investment in Fulgent is one of the important steps in implementing the company's strategic transformation. Through foreign investment, learning advanced technology, and drawing on advanced experience, the company breaks through the existing in vitro diagnostic reagent business type, progresses to a more cutting-edge field of genetic testing, continuously narrows the gap between the company and international industry giants, forms a complete in vitro diagnostic reagent industry chain, and plays a critical role in enhancing the company's competitiveness in the field of in vitro diagnostic reagents. Fujian Fujun Gene Technology Co., Ltd. is mainly engaged in domestic genetic testing and diagnosis business. Through genetic testing and other methods, it provides genomics diagnosis and research services for medical institutions, scientific research institutions, enterprises and institutions: basic research and clinical application services for reproductive health; basic research and clinical application services for complex diseases; basic research and clinical application services for complex diseases; basic drug research and clinical application services. This investment in the establishment of Fujun Gene Technology Co., Ltd. can effectively integrate the resource advantages of all parties in technology, talent, market, capital, etc., continuously promote the company's genetic testing and diagnosis business, provide world-class genetic diagnosis services to domestic medical institutions and general consumers, further expand the company's product line in the field of in vitro diagnostic reagents, and inject new development impetus into the company's development. Genetic sequencing has broad market prospects and development space. Genetic sequencing is one of the fastest growing segments of the in vitro diagnosis industry in recent years. Genetic diagnosis can not only track infectious disease pathways, but also predict individualized disease risks and effectively predict various diseases such as cancer, diabetes, and Down syndrome, thereby providing effective assistance for later prevention and treatment. As an important development direction in the country now and in the coming period, genetic testing has broad market prospects and development space. The main reasons for the steady increase in the company's performance in 2015 were: 1) optimization of the product structure, increase in the company's revenue and increase in overall gross margin; 2) increase in net profit brought about by acquired companies such as Shenzhen Huaxun and Hunan Huaxun; and 3) the newly established enterprise Xilong Medical contributed to profits. Continue mergers and acquisitions, integrate high-quality resources, and vigorously develop IVD business. In 2014, the company quickly entered the IVD field through the acquisition of a new continent, and continued to expand its layout in the IVD field. Subsequently, the Xilong Medical Diagnosis Center and the Jiaxing Qingshi Xilong Equity Investment Fund were established, the capital was increased, and Shenzhen Huaxun and Hunan Huaxun were acquired, further optimizing the product structure in the field of diagnosis. Since this year, the company has announced plans to acquire 70% of the shares of Fuzhou Xinbei and Shanghai Xibei to enter the field of reagents and POCT. The company continues to merge upstream and downstream of the in vitro diagnosis industry chain, and is expected to become a leading enterprise in the in vitro diagnosis industry in China. Lay out three platforms for reagent e-commerce, medical devices, and large-scale chemicals to create an advanced supplier of O2O in the domestic segment. Xilong (Shanghai) Medical Service Co., Ltd., the e-commerce platform “Pay Network” and “Dr. Mao Laboratory” are progressing smoothly. The company will rely on advanced marketing models and have strong supporting service capabilities, which will help improve the company's economic efficiency and market competitiveness, and become a new profit growth point for the company. Maintain the company's “buy” rating. The company is making steady progress in the field of in vitro diagnostics in the direction of expansion and strengthening. Combining the three platforms, it will build an advanced supplier of O2O in the domestic segment, introduce advanced foreign genetic sequencing technology, expand the company's product line in the field of in vitro diagnostic reagents, and inject new development impetus into the company's development. Without considering the impact of foreign investment, the company's 2015-2017 EPS is estimated to be 0.39, 0.66, and 0.92 yuan, respectively, giving it a “buy” rating. Risk warning: There is a risk that fund-raising projects fall short of expectations; transformation progress is slow, and foreign investment falls short of expectations.