Key investment events: The company released its 2017 annual report, achieving operating income of 1,594 billion yuan, a year-on-year increase of 14.14%, net profit of 218 million yuan, a year-on-year decrease of 6.30%, and non-net profit of 206 million yuan, a year-on-year decrease of 4.48%; 2017 profit distribution plan: cash dividends of 0.65 yuan for every 10 shares (tax included); the two shareholding platform companies founded by the company and company employees jointly increased capital to the company's subsidiary Kehua Medical. After the capital increase was completed, the company held 75% of its shares. Revenue and profit improved markedly in the fourth quarter. In the fourth quarter of 2017, the company achieved operating income of 454 million yuan, a year-on-year increase of 27.24%, an increase of 16.42% over the previous year, and net profit of 31.93 million yuan, an increase of 13.15% over the previous three quarters, a significant improvement over the previous three quarters. In terms of profitability, the period fee ratio increased by 1.86pp, mainly due to the company's increase in mergers and acquisitions in 2017, which led to a 45% year-on-year increase in management expenses, a 2.18pp increase in management expenses, a sales expense ratio of 14.45%, and a financial expense ratio of -0.47%, which remained basically stable compared to last year; the company's comprehensive gross profit margin ratio was 41.31%, down 0.39pp from the end of 2016. The main reason is that in the process of integrating the company's channels, the share of low-margin agency products gradually increased, reducing the overall gross margin level, and the company's overall net profit margin level was 13.89%, same as last year A decrease of 2.64pp from the ratio. Self-produced products are growing steadily, and integrated channels have led to rapid growth in agency business. In 2017, the company's self-produced products achieved revenue of 797 million yuan, an increase of 9.07% over the previous year, and agent products reached 784 million yuan, an increase of 19.81% over the previous year. The rapid growth rate of agent products was mainly due to the company's completion of mergers and acquisitions of Xi'an Shenke and Guangzhou Xinyou in 2017, and the proportion of agent products increased; by segment, biochemical growth in the reagent business is expected to be no more than 10%, and the growth rate of enzyme exemption is expected to be above 20+%. Self-produced luminescence is currently small, and overseas TGS's luminescence sales are expected to be above 100 million yuan. Set up business development platforms for collection and regional inspection centers, and actively explore new business models in conjunction with channel integration. As of April 2018, the company has completed the integration of 5 dealers. At the same time, the company's joint employee ownership platform has set up Kehua Medical as a business development platform for collection and regional testing centers, directly binding exploration of new business models to employee interests, further enriching market-based incentives, stimulating the enthusiasm of the business team, and improving team work efficiency. Profit forecast and valuation: We expect the company's revenue in 2018-2020 to be 18.16, 20.86, and 2,394 billion yuan; YOY is 13.89%, 14.91%, 14.76%; net profit attributable to the parent company is 2.49, 2.96, and 354 million yuan; YOY is 14.53%, 18.80%, 19.46%, and the corresponding EPS is 0.49, 0.58, and 0.69 yuan. The company's current stock price corresponds to 28 times PE in 2018. Considering the brand channel advantages of the company's established IVD leaders Furthermore, the development of the collection business will help increase the market share of the company's products. We believe that the company's reasonable valuation range in 2018 was 30-35 times PE, and the reasonable price range was 14-18 yuan, maintaining the “increase in holdings” rating. Risk warning: risk of product promotion falling short of expectations, risk of accounts receivable, risk of policy changes.