2018H1's revenue and profit increased by 30% in the first half of 2018, and the company achieved revenue of 8.52 billion yuan (+30.36%) and net profit of 185 million yuan (+29.82%). Devices and pharmaceuticals are growing rapidly, and in-depth brand cooperation is strengthened. The 25 medical device subsidiaries of 2018H1 Company achieved revenue of 5.1 billion yuan (+27%) and net profit of 200 million yuan. Among them, the two major device platform companies, Jiashi Guorun and Jiashi Weizhong, had revenue of 1.6 billion yuan (+50%). Through mergers and acquisitions, the company has formed a nationwide distribution network for high-value medical consumables, covering 30 provinces and cities, and thousands of medical terminals. In response to the two-ticket system for consumables, the company strengthened deep cooperation with brands and the holding subsidiary Jiashi Guorun obtained the only agent for Johnson & Johnson electrophysiology products in the country, which is expected to increase the company's annual sales revenue by more than 1.5 billion dollars. At the same time, the company is also actively promoting domestic agency matters for consumables with Medtronic and Abbott. The gross margin declined slightly, and the cost ratio improved. The overall gross margin of 2018H1's pharmaceutical wholesale business was 9.45%, a year-on-year decrease of 0.45%, mainly related to the price reduction of Chinese pharmaceuticals and equipment products in the new round of bidding. By region, the revenue of the Beijing region was 4.135 billion yuan (+32.63%), and gross margin fell by 0.25 pp. The impact of Sunshine procurement was gradually digested, and the decline was reduced; revenue in other regions was 4.385 billion yuan (+28.28%). Affected by price cuts for consumables in various regions, gross margin fell 0.92 pp. The sales expense ratio for the first half of the year fell 0.25pp year on year, the management expense ratio fell 0.08, and management continued to be optimized; the financial expense ratio increased by 0.34pp, mainly due to the increase in capital requirements and interest payments after the two-vote system. Accounts receivable management was strengthened, and cash flow/net profit improved year over year to cope with market capital pressure. The company strengthened receivables management and risk control. The number of accounts receivable turnover days was 115 days, a decrease of 5 days over the previous year. 2018H1 Operating cash flow is -320 million, and the cash flow/net profit ratio improved year over year (-1.7 vs. -2.0). The risk indicates the risk of price reduction in medical device consumables tenders; progress in business development outside of Beijing has not met expectations. Pharmaceuticals+devices are driving high growth and maintaining the “buy” rating. The estimated net profit for 2018-2020 is 328/4.14/520 million yuan, respectively, and the EPS is 1.31/1.65/2.08 yuan, respectively. The current stock price corresponds to PE 17/13/10x. We believe that the company's pharmaceutical equipment is growing rapidly on two wheels and is expanding smoothly throughout the country. Currently, the valuation is low, and the “buy” rating is maintained.