Key investment performance summary: The company achieved operating income of 26.48 billion yuan in 2017, up 22.3% year on year; realized net profit of 4.10 billion yuan, up 22.8% year on year; realized net profit after deduction of net profit of 4.03 billion yuan, up 21.6% year on year; net operating cash flow was 1.84 billion yuan, up 15.0% year on year; at the same time, the company achieved revenue of 9.14 billion yuan, up 27.7% year on year; net profit from net profit of 1.42 billion yuan, up 33.3% year on year; net profit after deduction 1.42 billion yuan, up 33.8% year on year. The performance is generally in line with expectations, and Chinese medicine tablets and medical devices are growing rapidly. The year-on-year growth rate of the company's net profit in 2017 and 2018 Q1 was 22.8% and 33.3% respectively. Among them, the high growth in 2018 Q1 was mainly due to the fact that the 2017 Q1 high-tech corporate income tax concession had not yet been confirmed and was prepaid at 25%, while in 2018Q1, after deducting the impact of corporate income tax, the operating profit of 2018Q1 was still 18.7% year-on-year, and the performance was in line with expectations. By product line: 1) Chinese herbal medicine trade: continued contraction, achieving revenue of 5.86 billion yuan in 2017, an increase of 1.2% over the previous year; 2) Chinese medicine tablets: achieved revenue of 6.16 billion yuan in 2017, an increase of 30.9% over the previous year. Driven by the new smart pharmacy model, continued the rapid growth trend; 3) Western medicine trade: Driven by pharmacy trusteeship, achieved revenue of 9.60 billion yuan in 2017, an increase of 31.4%; 4) Medical devices: focusing on high-value orthopedic consumables, achieving 20.0 billion yuan in 2017, a year-on-year increase of 20.0 billion yuan; Growth of 117.9%; 5) Health food and food: Achieved revenue of 1.86 billion yuan in 2017, up 7.3% year on year; 6) Property management: Achieved revenue of 780 million yuan in 2017, down 17.1% year on year, but gross margin increased 8.14 pp year on year. Driven by the Chinese medicine tablet and medical device business, we believe the company will continue to grow by more than 20%. Smart pharmacies have become large-scale, significantly driving the rapid growth of traditional Chinese medicine tablets. Since Smart Pharmacy was officially put into operation in June 2015, its business has developed rapidly. The company has completed layout in key cities such as Guangzhou, Shenzhen, Beijing, Shanghai, Chengdu, Puning, Chongqing, Xiamen, Kunming, Guiyang, and Meihekou. The smart pharmacy successfully undertakes the functions of traditional hospital pharmacies, connects with the prescription resources of medical institutions in real time, and is extremely scalable. At present, the company has established long-term cooperative relationships with more than 2,000 medical institutions and about 200,000 pharmacies, and the total number of outpatient visits in cooperating medical institutions has reached more than 200 million per year. This is evidenced by the rapid growth of the Chinese medicine tablet business in 2017. Driven by smart pharmacies, we expect the company's Chinese medicine tablet business and other businesses to maintain growth of around 30%. Profit forecasts and investment advice. The 2018-2020 EPS is expected to be 1.00 yuan, 1.21 yuan, and 1.45 yuan respectively, corresponding to current stock price valuations of 23 times, 19 times, and 15 times, respectively, and the company's net profit to the mother's net profit will maintain a compound growth rate of 21% over the next 3 years. The company is a leading enterprise in the traditional Chinese medicine industry. In the context of the country's vigorous promotion of traditional Chinese medicine, the company has broad development prospects and maintains a “buy” rating. Risk warning: risk of significant price fluctuations of Chinese herbal medicines or Chinese medicine tablets; risk of implementation of strategic cooperation agreements or failure to meet expectations; risk of promotion of Internet healthcare service platforms or risk of falling short of expectations.