Recently, the company announced its 2018 quarterly report. During the reporting period, the company achieved operating revenue of 213 million yuan, a year-on-year decrease of 13.4%; net profit attributable to the parent company was 69 million yuan, an increase of 26.84% over the previous year. Net profit after deduction was $0.42 billion, a year-on-year decrease of 26.22%. The growth rate of net profit attributable to mother is faster than that of net profit not attributable to mother is mainly due to receiving government subsidies of 28.87 million. Commenting on the future release of neovactin can be expected. On July 19, 2017, Neoactive was included in Class B of the 2017 medical insurance catalogue. The medical insurance payment standard was 585 yuan (0.5 mg (500U) /bottle), a price reduction of about 40%. Due to the price adjustment of Neoactive, the proportion of payment of promotion fees was reduced by 56% to 55%. Neoactive revenue is expected to account for about half of total revenue during the reporting period, and sales are estimated to have maintained rapid growth due to price reduction factors. We believe that with Kangzhe's strong sales and promotion team, it is expected that new actin etc. will be released one after another. A large percentage of shareholders participated in the fixed increase, showing confidence in the company's future development. The fixed increase was completed in May 2017. The fixed price increase was 36.48 yuan/share, and the capital raised was 1,241 billion yuan. The fixed increase was used to acquire IMDUR products, brands and related assets. The fixed increase was used to acquire IMDUR products, brands and related assets, and the locked in period of 3 years. Among them, Kangzhe Management, the majority shareholder, subscribed for 990 million yuan, and the company's shares held by Kangzhe Management and its co-actors increased from 26.61% to 37.57%. We believe that the majority shareholders' participation in the fixed increase fully demonstrates their confidence in the company's future development. Financial indicators: During the reporting period, the overall gross profit margin was 79.23%, up 2.62pp year on year. The cost rate for the period was 54.39%, up 5.06 pp from year on year. Among them, the sales expense ratio was 48.52%, up 3.78 pp, estimated to be due to the increase in the cost of new activity; the management fee ratio was 7.13%, up 3.16 pp year on year, mainly due to the impact of increased operating expenses, membership fees, etc. compared to the previous period; the financial expense ratio decreased by 1.88pp year on year, mainly due to the fact that the limited subsidiary TopRidge Pharma accrued interest on loans of 3.54 million yuan in the previous period. During the reporting period, accounts receivable were $316 million, compared to $63 million in the same period last year; net operating cash flow was $58 million, which was negative $08 billion for the same period last year. Profit forecast and rating: We are optimistic that Imdo will enter the new medical insurance catalogue. It is expected to expand rapidly in the next 3 years to promote the company's rapid development. We adjusted the company's 2018-2019 EPS to 1.54, 2.02, and 2.55 yuan respectively, corresponding to the closing price PE on April 26 to 28, 21, and 17 times, respectively. Risk warning: Neoactive marketing falls short of expectations; Imdo's sales fall short of expectations; performance falls short of expectations.