The global glove industry has significantly benefited from the demand for COVID-19 protection, and the demand side is expected to grow by about 20%. Looking at the glove demand side, global glove demand has maintained long-term steady growth. According to data from the China Plastics Association and the Malaysian Glove Industry Association, in 2019, the global medical grade glove market reached 306 billion, the non-medical grade glove market reached 189 billion, and the overall glove industry maintained steady growth of 8-10%. In view of the increase in protective demand brought about by the COVID-19 pandemic, the Malaysian Glove Association expects industry demand growth to be raised to around 20% in 2020 (about 17% increase during the HIN1 pandemic). Top Glove CEO Lim Wee Chai expects the normal post-pandemic demand growth rate in the industry to around 12-15% from the existing 8-10%. The protective gloves industry has considerable barriers, and leading companies have expanded production without changing the supply and demand pattern. The time, capital, design, and installation conditions required to build production capacity for PVC gloves and nitrile gloves are much more complicated than epidemic supplies such as masks and medical alcohol. Each production line for PVC gloves requires an investment of about 8 million yuan and a production cycle of 8 months. Each production line for nitrile gloves requires an investment of about 26 million yuan and a production cycle of 12 months. Orders from leading overseas companies such as TopGlove, Supemax, and Kossan have been scheduled to 2021/Q1, and various companies have announced plans to expand production. According to our statistics, the design production capacity of the eight leading enterprises counted in 2020 only expanded by 56.8 billion units compared to 2019, while industry demand increased by about 99 billion units; the design capacity of the eight leading enterprises counted in 2021 expanded by only 65.9 billion units compared to 2020, while industry demand increased by another 71.3 billion units. We believe that the expansion of production by industry leaders is a unanimous judgment made by comprehensively considering the epidemic cycle, production cycle, and continued demand, and will not cause overcapacity or price collapse. Blue Sail Medical: Global leader in PVC gloves, nitrile production capacity expansion to meet explosive demand. Blue Sail Medical is the largest manufacturer of health gloves in China and the world leader in PVC gloves. In 2019, it had a production capacity of 15 billion PVC gloves and 4 billion nitrile gloves. In 2020, the production capacity of PVC gloves was increased by 4 billion, and the production capacity of nitrile gloves was increased by 2 billion through convertible bond fund-raising projects. In June 2020, the company announced that it plans to build and put into operation 30 billion nitrile gloves by December 2023, and build a new production capacity of 800 million PVC gloves in Vietnam. We believe that the company's glove business has obvious advantages in terms of production costs, automated control, and sales layout. The current COVID-19 pandemic has also spawned strategic opportunities for restructuring the global disposable protective gloves industry chain. Blue Sail is expected to leap forward again with years of industry accumulation and complete Chinese factors. The national collection of high-value consumables will soon be launched, and Blue Sail's cardiovascular business has ushered in growth opportunities. Currently, the company's main products listed in China include Excel and the second-generation product EXCROSSAL. The products listed by Baisheng International in Europe and Japan mainly include BioMatrix series products and BioFreeDOM products. Among them, the BioFreeDOM stent is expected to be approved for listing by the US FDA in Q2 this year, and is expected to be approved for listing by China's NMPA by the end of this year; the new product rapamycin eluting coronary drug balloon is expected to be approved for sale in 2021, and the product line in the Chinese market will be more complete and rich at that time. On the morning of May 28, 2020, Chen Jinfu, deputy director of the National Medical Security Administration, hosted a symposium on the reform of centralized procurement of high-value medical consumables to listen to the opinions and suggestions of representatives of some enterprises and associations. The industry expects that in the second half of this year, the National Health Insurance Administration will lead the unified collection and implementation of high-value consumables such as coronary stents, coronary balloons, and artificial crystals, on the basis of earlier pilots in Anhui, Jiangsu, Jiangxi and other provinces and cities. At the two national meetings, Ms. Liu Wenjing, chairman of Blue Sail Medical, made positive suggestions, saying that collection and volume procurement is a good remedy for reform that benefits the country and the people, and that she firmly supports centralized procurement led by the National Health Insurance Administration. We believe that the upcoming nationwide collection of stents will be an opportunity for Blue Sail Healthcare's cardiovascular business to leap forward again. Profit forecast: The company's sales revenue in 2020-2022 is expected to be 7.263 billion yuan, 6.958 billion yuan and 9.015 billion yuan, up +108.97%/-4.20%/+29.56% year on year; net profit is 2,721 billion yuan, 2.162 billion yuan and 1,647 billion yuan respectively, up +454.95%/-20.55%/-23.80% year on year; current market value is 27.3 billion yuan, corresponding PE is 10/13/17 times. The company is the world's leading disposable glove company and has significantly benefited from the protective demand brought about by the COVID-19 pandemic. The plan to continue expanding production of nitrile gloves is expected to continue to increase its market share and position in the industry. The coronary stent business is expected to usher in development opportunities in the collection of high-value consumables in the country. Biofreedom stents and rapamycin coronary drug balloons will soon be approved for listing in China, providing an impetus for continued performance growth. Maintain the company's “Highly Recommended” investment rating. Risk warning: the risk of sharp fluctuations in the glove market price; the risk that the progress of new glove production capacity construction falls short of expectations; the risk of a sharp price reduction in the collection of high-value consumables; and the risk that sales of new products such as Biofreedom fall short of expectations.