Key investment performance summary: In 2018 H1, the company achieved operating income of 8.5 billion yuan (+30.4%), net profit of 190 million yuan (+29.8%), net profit of 190 million yuan (+29.8%), and net profit of 180 million yuan (+25.3%) after deducting non-return net profit of 180 million yuan (+25.3%). The revenue growth rate is impressive, and business structure and financial expenses affect profitability. The company has developed multiple business formats for pharmaceuticals, consumables and logistics in Beijing, Anhui and Sichuan. The Beijing region achieved revenue of 4.13 billion yuan (+32.6%) in 2018 H1, and other regions achieved revenue of 4.39 billion yuan (+28.3%). Due to the rapid growth rate of the consumables distribution platform business and the accelerated growth rate of the pharmaceutical distribution business in Beijing (the gross margin of these two businesses is low), the gross margin decreased by 1.2 percentage points. Furthermore, due to the extended payback period for accounts receivable, the financial expense ratio increased 0.03 percentage points year over year, and the net interest rate decreased by 0.34 percentage points year over year. Drug distribution benefits from Beijing Sunshine Procurement and innovates business models such as GPO and PBM. The company's pharmaceutical wholesale business is concentrated in the Beijing region, and its advantage is the distribution of basic drugs. Since 2012, it has covered 8 districts and counties as one of the 5 basic drug distributors (signed an exclusive distribution agreement with Haidian District). In 2017, Sunshine Bidding won nearly 30,000 bids. The implementation of the new bid expanded the company's market share of pure sales in hospitals, and the pharmaceutical sector ushered in opportunities for accelerated growth. Industry integrators in equipment distribution benefit from industry policies such as the two-vote system and collection. The growth rate of the medical device industry is about 20%. As a rapidly growing market segment, companies have been actively deploying high-value consumables distribution companies since 2013. They are in a leading position in the national high-value cardiology consumables market, and initially formed a nationwide distribution network covering the whole country since 2014. The company acquired Zhejiang Jiashi Tonghan and Zhejiang Jiashi Shangyang in 2017 and entered the IVD distribution field. In the context of the two-ticket system and centralized procurement of equipment and consumables, the company, as a leader, is expected to maintain a growth rate of more than 30%. Earnings forecasts and ratings. The estimated EPS for 2018-2020 is 1.35 yuan, 1.75 yuan, and 2.26 yuan, respectively. The current stock prices corresponding to PE are 16X, 12X, and 10X, respectively. Compared with the company's historical valuation, it is currently at a low level. I am optimistic about the company's ability to integrate in the field of equipment and consumables, and maintain the “buy” rating. Risk warning: The risk that the price of equipment and consumables exceeds expectations, and the risk that the turnover period of accounts receivable will be extended.