Key investment events: The company issued an announcement to increase the capital of Wuhan Coredy with 4.9382 million yuan of its own capital, while expanding the shares of 37.31% of the original shareholders of Coredi with 7.4402 million yuan, using a total capital of 12.3784 million yuan. After the transaction was completed, the company held 62.08% of Credi's shares, and Coredy became a holding subsidiary of the company. The acquisition of Coredy went deep into central China, and the nationwide layout of dialysis powders began to take shape: Coredy is mainly engaged in the production and sale of hemodialysis concentrates and dialysis powders, and the current market is mainly concentrated in Hubei, Hunan and surrounding provinces and cities. The technical cost of dialysis powder is not high, but since transportation costs are high, it has a strong local monopoly. Previously, the company had completed the multi-site layout of dialysis powder through self-construction and expansion, but with this expansion, Coredy realized the layout of the company's dialysis powder manufacturing base in central China, so that the company can rely on Coredy to break through the original restrictions on radiation to surrounding provinces and cities and effectively shorten the transportation radius of dialysis powder sales in central China. At this point, the company has basically completed the layout of dialysis powder in Northeast China, North China, Central China, South China, East China and South China, and the national layout of dialysis powder is beginning to take shape. The layout of the entire “product+channel+service” industry chain has been initially completed, and it is expected that it will enter the harvest period: (1) On the product side, the D30 dialysis machine independently developed by the company was officially approved by the CFDA in July 2015, and the second-generation hemodialysis machine D50 is also being actively developed; the company has already expanded and built its dialysis powder layout in Northeast China, North China, Central China, South China, East China and South China. The national layout is initially completed, and the market share continues to rise; the company's subsidiary Boao Tiansheng's dialysis pipeline products have also been approved by the CFDA. High growth can be expected; core The component dialyzer is the product with the highest barrier among hemodialysis products. Currently, the company's dialyzer development is progressing smoothly, and we expect approval in 2018. (2) In terms of channels, the company did not cooperate with high-quality channel providers in the region to establish Shenbao Medical, Baorui Medical, and Shenzhen Baoyuan, respectively, to quickly enter the hemodialysis markets in Shanghai, Guizhou, and Guangdong regions. (3) In terms of service, private for-profit hospitals have been gradually expanded through extension expansion, and a chain of hospitals for nephrology and medicine focusing on blood purification has been established nationwide by adopting the model of “big, department, small integration”. Qingjin Kanghua Hospital and Tongtai Hospital have been launched one after another, and the company's entire industry chain layout has been successfully completed. (4) By expanding Hengxin Biotech's involvement in the field of disinfection products, the company is expected to use hemodialysis disinfectant as an entry point and gradually enter all disinfectant products in hospital sensory control; at the same time, recently through the expansion of Guangzhou Yili's involvement in water purification equipment, the product line has been continuously improved, making it one of the few companies in the industry with a full industry chain layout. We believe that the company has completed the previous industrial layout, that the performance in the hemodialysis sector has begun to show results, that the company is expected to enter a harvest period in the future, and that the performance is expected to maintain a trend of continuous high growth. Investment advice: We forecast the company's earnings per share for 2017 to 2019 to be $0.61, $0.85, and $1.08, respectively. Maintain the buy-A recommendation. The target price for 6 months is 31 yuan, which is equivalent to a price-earnings ratio of 51 times that of 2017. Risk warning: Competition in the hemodialysis market has intensified, expansion progress has not met expectations, and dialyzer registration has fallen short of expectations.