The incident company released its 2017 semi-annual report, achieving revenue of 360 million yuan, a year-on-year increase of 22.5%; realized net profit of 37.1285 million yuan, a year-on-year increase of 2.72%; net profit after deduction of 334.219 million yuan, a year-on-year decrease of 7.6%, with basic earnings per share of 0.73 yuan. Key investment points 1. Revenue growth is stable, and gross margin has been drastically reduced. Since its listing, the company has begun the pace of national expansion. In the first half of the year, it achieved total revenue of 360 million yuan, an increase of 22.55% over the previous year; of these, Q2 achieved revenue of 198 million yuan, an increase of 26.92% over the previous year, an increase of 21.47% over the previous year, and the effects of business expansion and corporate merger gradually became apparent. On the profit side, during the reporting period, the company achieved a total net profit of 37.1285 million yuan, a year-on-year increase of 2.72% (year-on-year decrease of 7.6% after deduction). Among them, Q2 net profit to mother was 22.4977 million, a year-on-year decline of 10.48%. The decline in performance was affected by various factors: first, the increase in business consolidation and equipment investment led to a year-on-year decrease of nearly 5 percentage points in gross margin; secondly, the rapid increase in employee remuneration led to a 30.91% and 20.10% year-on-year increase in management expenses and sales expenses, respectively. 2. The national layout progressed rapidly, increasing the gap market development. During the reporting period, the company established or acquired new subsidiaries in Shandong, Jiangxi and other provinces and cities. The business layout gradually expanded from the dominant Lianghu region to the southeast coast, west and northeast regions. As of June 30, it invested in holding or participating in 22 subsidiaries to carry out intensive business nationwide. At the same time, the company actively participated in the construction of regional testing centers in Huangshi, Hubei and Jiaozhou, Shandong, to strengthen the core competitiveness of “integrated diagnostic products+diagnostic services”, while also further locking in market share in relevant regions. In addition, the company also plans to initiate the establishment of an industrial fund, initiate refinancing, etc., to supplement follow-up capital, enhance layout capabilities, and accelerate development through the capital market. 3. Strengthen upstream cooperation. Self-developed products are expected to improve profitability. On the one hand, the company will strengthen strategic cooperation with upstream suppliers, reduce procurement costs and enhance market competitiveness through capital increases and acquisitions to reduce procurement costs and enhance market competitiveness. On the other hand, it will continue to increase investment in R&D of new products, optimize the self-developed product structure, and expand R&D and production capacity. During the reporting period, the company established 94 R&D projects, covering different R&D product lines such as coagulation, clinical biochemistry, colloidal gold, autoimmunity, etc. Among them, five projects, including the Colloidal Gold Project Obscure Blood, obtained clinical approval to further enrich and optimize the company's product line. The company continues to explore an empty market, and the scale effect will inevitably lead to an increase in upstream bargaining power, and with the abundance of its own products, profitability is expected to continue to improve. The investment proposal company focuses on intensive sales business. It started early in the field of in vitro diagnosis management services, is in a leading position in the industry, and has a strong competitive advantage. Since its listing, the company has successively set up a number of subsidiaries to accelerate the development of an empty market. In the short term, due to the impact of business expansion and the increase in intensive equipment, the company's profit was slightly lower than expected for the time being, but in the long run, the increase in the number of covered medical institutions will drive rapid growth in the company's performance, and the large-scale effects of market development will gradually be unleashed. According to the interim report, we have temporarily adjusted the company's profit forecast. EPS for 2017-2019 was 1.66/2.18/2.62 yuan, respectively. The corresponding price-earnings ratios were 54X, 41X, and 34X, maintaining the “recommended” rating. Risk warning: risk of policy changes, risk of market competition, risk of epitaxial expansion.