Event: The company released its 2018 semi-annual report. Meanwhile, the company expects to achieve a net profit range of 200-260 million yuan in the first three quarters of 2018, an increase of 0-30% over the previous year. Comment: Performance growth accelerated in the second quarter. In the first half of 2018, the company achieved 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 attributable to shareholders of listed companies after deduction was 182 million yuan, up 23.53% year on year, corresponding to EPS of 0.74 yuan. Among them, Q2 had quarterly revenue of 4.732 billion yuan, a year-on-year increase of 34.99%, a growth rate faster than 25.00% in Q1; net profit attributable to shareholders of listed companies was 97.62 million yuan, an increase of 36.04% over the previous year, a growth rate faster than 23.54% in Q1; and the company's performance was in line with expectations, with outstanding performance in the second quarter. Operating efficiency has been steadily improved. The company's gross sales margin for the first half of the year was 9.93%, down 0.16pp year on year; net sales margin was 3.63%, down 0.14pp year on year, mainly affected by policies such as the two-vote system and zero drug bonuses. During the reporting period, the company's sales expense ratio was 2.77%, down 0.25pp year on year; management fee rate was 1.08%, down 0.07pp year; financial expense ratio was 0.96%, up 0.35pp year on year. The increase in financial expenses was clearly mainly affected by the rapid increase in the company's operating income during the reporting period, while increasing the company's financing during the reporting period. During the reporting period, the company's inventory turnover days fell 3.04 days year on year, accounts receivable days fell 5.72 days year on year, and operating efficiency continued to improve. The integrated effects of epitaxial expansion are evident. During the reporting period, the company is committed to strengthening agency cooperation with well-known foreign companies. The holding subsidiary Jiashi Guorun has signed an agreement with Johnson & Johnson to become the only agent for Johnson & Johnson electrophysiological products in the country. The conclusion of this agreement is expected to increase the company's annual sales revenue by more than 1.5 billion dollars. In addition, the company is also actively promoting cooperation with Medtronic and Abbott in national or regional agency matters involving consumables, in an effort to maintain an advantageous position in domestic subdivisions. In December 2017, the company successfully acquired Jiashi Shangyang and Jiashi Tonghan. The two subsidiaries each occupied important positions in the cervical cancer screening market and the biochemical immunization market. The two companies achieved a total net profit of more than 16 million yuan during the reporting period. The in vitro diagnosis business is expected to develop into a new growth pole for the company in the future. During the reporting period, the company's revenue in the Beijing region increased by 30.36% year-on-year. The company's development of the hospital market in the Beijing region and the coverage of community distribution and retail chains are showing increasing results. Furthermore, after the company acquired Chengdu Rongjin in July 2017, the company formed a multi-format development pattern of pharmaceuticals, consumables and logistics in Sichuan. Subsidiaries in Sichuan Province achieved net profit of more than 27 million yuan during the reporting period. Under the influence of the two-vote system policy, the concentration of pharmaceutical businesses continues to increase. It is expected that the company will further accelerate the integration of regional resources and accelerate the pace of nationwide expansion. Profit forecast and investment rating: We predict that the company's net profit attributable to the parent company in 2018-2020 will be 344 million yuan, 441 million yuan, and 559 million yuan respectively. The corresponding EPS will be 1.37 yuan, 1.76 yuan, and 2.23 yuan respectively. The current stock price corresponding to PE is 15.7/12.3/9.7 times, respectively. Maintain a “Recommended” rating. Risk warning: the risk of price reduction of pharmaceutical equipment and consumables; the risk that the company's external expansion will not meet expectations.