Investment points: Performance grew steadily, and the growth rate continued to outperform industry companies in the first half of 2018 in revenue of 8.520 billion yuan, up 30.36% year on year; net profit attributable to shareholders of listed companies was 185 million yuan, up 29.82% year on year; net profit after deducting non-return net profit of 182 million yuan, up 23.53% year on year; net operating cash flow outflow of 321 million yuan, slightly worse than the same period last year. Equipment distribution leader. The national layout company is the leader in the distribution of equipment and consumables, with a nationwide layout. Jiashi Jiayi, Jiashi Yicheng, and Jiashi Jijian won the bid for a centralized distribution of hospital consumables for upstream and downstream customers; Jiashi Minglun, Jiashi Jiayi, and Jiashi Guorun actively sought national general products to deal with medical reform policies such as the two-ticket system in advance; acquired two high-quality companies, Jiashi Shangyang and Jiashi Tonhan in '17, and entered the IVD field; Jiashi Guorun signed an agreement with Johnson & Johnson to obtain the only agent for Johnson & Johnson's electrophysiological products in the country. The conclusion of this agreement is expected to increase the company's annual sales revenue by 1.5 billion dollars That's it. At the same time, the company is also actively promoting national agency cooperation with Medtronic and Abbott on intracardiac intervention consumables. The leading drug distribution leader in Beijing, the foreign port drug distribution siege company, has actively grasped the opportunity of the two-ticket system transformation in the Beijing market. On the one hand, the company is stepping up efforts to develop key hospitals and empty areas. On the other hand, the company is the second largest community essential drug distributor in Beijing. At the same time, it also has the largest network of direct-run pharmacies in Beijing, expanding the sales share of community distribution and retail chains. In addition, the company has successively carried out drug distribution business in Anhui and Sichuan, and has formed a multi-format development of pharmaceuticals, consumables, and logistics in Beijing, Anhui, and Sichuan, increasing regional resource integration, and the regional aggregation effect is gradually reflected. The actual controllers of companies that rely on Everbright Group and have various financing channels have changed and implemented. The state-owned shares of Zhongqing Industrial, the controlling shareholder of the company, are transferred from the Central Committee of the Communist Party of China to Everbright Group. Everbright Group directly holds 100% of the shares in Zhongqing Industrial and indirectly holds 16.72% of the company's shares. The company's main business is pharmaceutical business. The bottleneck in the development of pharmaceutical commercial companies is financing. In an environment of tight funding and rising capital costs, relying on Everbright Group, the company's growth rate is expected to continue to exceed the industry average. Profit forecasting and investment rating companies are leading distributors of equipment consumables nationwide and drug distribution leaders in Beijing, Anhui, Sichuan and other regions. Relying on Everbright Group, we believe the company can continue to develop steadily over a long period of time. We expect the company's net profit in 2018-2020 to be 328 million yuan, 413 million yuan, and 545 million yuan respectively, and EPS of 1.31 yuan, 1.65 yuan, and 2.17 yuan respectively. The current stock prices corresponding to PE are 17X, 14X, and 10X respectively. Compared with the industry and historical levels, the current valuation is low, covered for the first time, giving it an “increased holding” rating. Risk warning: risk of price reduction of consumables and pharmaceuticals; risk of rising financing costs; risk of worsening competition in the equipment distribution industry.