one. Incident: The company issued an announcement. Mr. Yan Jinyuan, the actual controller of the company, submitted a “Proposal for Company Employees to Increase Their Shareholding of Company Shares”. Based on confidence in the company's development, all employees of the company, wholly-owned subsidiaries, and holding subsidiaries actively bought Polite shares, and promised, “Anyone who bought Paulite shares net from June 5 to June 9, 2017, and held continuously for more than 12 months, losses arising from the increase in holdings shall be compensated; the profits are owned by the employees themselves.” II. Incident review: Firmly optimistic about the company's long-term development in the hemodialysis industry. 1. The non-public offering review passed, vigorously laid out the consumables production base, and released production capacity, which became an important step in ensuring the long-term development of the company. The company plans to make a non-public offering of no more than 270 million yuan for projects such as “acquisition of 40% of Zhixin Hongda's shares”, “acquisition of 60% of Changzhou Huayue's shares”, “Tianjin hemodialysis consumables industrialization construction project”, “Nanchang hemodialysis consumables industrialization construction project”, and “supplementary working capital”. The application for non-public distribution was reviewed and approved on March 28. After receiving approval, the company can quickly expand the production capacity of hemodialysis consumables, laying the foundation for the company's long-term development in the hemodialysis industry. 2. The hemodialysis product line is gradually being enriched, and it is only a matter of time before the entire industry chain is completed. 1) Upstream blood penetration, full product line layout. The company's D30 dialysis machine obtained a registration certificate in 2016 and has already been sold; at the same time, the company established Paulette in Germany to make full use of Germany's advanced technology in the field of blood purification, especially in the development of dialyzers to obtain higher quality technology, and complete the layout of the company's entire hemodialysis product line (dialysis powder, liquid, dialysis lines, dialysis machines, dialysis machines, dialyzers). 2) Hemodialysis midstream, continuous expansion of channel providers: Following Baorui Medical (Guizhou hemodialysis channel) and Shenbao Healthcare (Jiangsu, Zhejiang, Shanghai, Shandong, Anhui, etc.), the company and Shenzhen Yuanwei Industrial Co., Ltd. jointly established Shenzhen Baoyuan (covering hemodialysis channels in Guangdong), and the layout in the hemodialysis channel field has been gradually promoted, and has covered many regions such as East China, South China, Northeast China, and Southwest China. Currently, the company has not relaxed the pace of channel provider expansion, and is still actively seeking potential partners. 3) Downstream hemodialysis, entering medical services, and controlling dialysis centers: The company has deployed the field of hemodialysis medical services through various forms, including cultivating hospitals with nephrology and hemodialysis centers in vitro, operating hospital hemodialysis centers through equipment deployment, operation of hospital hemodialysis centers, and equipment delivery and supply of consumables. The company's long-term development plan is to establish a “Paulite brand” nephrology medical service system, control terminal patients, and achieve the goal of providing services for the entire hemodialysis industry. 3. Profit forecast and investment suggestions: We expect the company's sales revenue in 2017-2019 to be 785 million yuan, 1,030 million yuan and 1,342 million yuan, and net profit attributable to the parent company of 9024 million yuan, 11.87 million yuan and 157.93 million yuan. The corresponding diluted EPS is 0.62 yuan, 0.81 yuan and 1.08 yuan respectively. We believe that the company has a clear layout of the entire hemodialysis industry chain. Upstream product production, midstream channel coverage, and downstream medical services control patients, the company has huge room for development amid the explosion of the hemodialysis market. Therefore, we continue to recommend and maintain our “Overweight” rating. 4. Risk warning: The development of medical services for nephrology fell short of expectations; the expansion of production capacity for hemodialysis consumables fell short of expectations; and the overseas market for monitors was affected by factors such as policies and exchange rates.