Incident: On May 27, 2016, the company issued an announcement stating that the company is considering applying for a public offering of domestic shares and listing in the People's Republic of China (“Proposed A-share offering”). In the process of evaluating or preparing the proposed A-share sale, the company will submit preliminary procedures such as guidance and filing to the relevant departments of the Chinese government. At the same time, the company also warned that the proposed A-share offering may not necessarily be implemented. Investors are reminded to act with caution. After completing the proposed A-share plan, the company will review it by the company's board of directors, shareholders' meetings and class shareholders' meetings, and will make a separate announcement on the proposed A-share sale in due course in accordance with any applicable provisions of the “Hong Kong Stock Exchange Limited Securities Listing Rules”. Main opinions: 1. The company announced its intention to enter A-shares, once again meet capital market tests, and set a benchmark for the integrity of private hospitals. Kangning Hospital was listed on the Hong Kong Main Board on November 20, 2015. After listing, it received widespread attention from the overseas psychiatric industry. Currently, it is the largest mental health chain group in the country. The company's business origin and flagship hospital are located in Wenzhou City, Zhejiang Province. Currently, the company's medical services mainly cover Zhejiang Province, Beijing and surrounding areas, Chengdu and South China. We believe that the company's proposed listing on the A-share capital market in mainland China is a reasonable choice. On the one hand, this move can enhance popularity and brand influence in the private medical industry where the company is located, and on the other hand, it can also establish honesty and determination to be tested by the market and the public in front of Chinese private medical service consumers. This has played a role as a benchmark for integrity in the current domestic private medical institution market where there is a lack of integrity and rapid success. The company's more than 20 years of hard work, focus and charitable activities help domestic medical service consumers to re-understand the characteristics of excellent private hospitals . Recently, Wenzhou Kangning Hospital Co., Ltd. officially opened Linhai Kangning Hospital, the first psychiatric hospital invested and built in Taizhou. At the same time, the hospital donated 3 million yuan to the local charity to establish the Linhai Kangning Mental Illness Charity Fund to help mentally ill people from needy families in Taizhou. The General Office of the State Council also recently led a research team to investigate the medical work of social forces in Wenzhou Kangning Hospital Co., Ltd., and fully affirmed Corning's path of medical treatment by social forces over the past 20 years. 2. Research investment and professional psychiatric talent training provide a strong guarantee for the company's asset-light expansion. We believe that based on current operating beds, Corning has become the largest mental health chain group in the country. In the first 5 months of 2016, 4 institutions (480 beds) have already been put into operation, and at least 4 new hospitals will be put into operation before the end of the year. It has developed into a medical school with 13 system chains (more than 2,860 beds in total), a medical school with mixed ownership - School of Psychiatry of Wenzhou Medical University, Wenzhou Kangning Institute of Mental Health, Wenzhou Corning Forensic Laboratory and “DD Psychology”, an internet online medical platform focusing on mental psychology. Since 2014, the company has published eight scientific citation index (“SCI”) academic papers under the name of Wenzhou Kangning Hospital, and received the National Natural Science Foundation of China in 2015. As an affiliated hospital of Wenzhou Medical University, Wenzhou Medical University trains 30 psychiatry graduates every year. The company's original largest psychiatric medical team in the country and these graduates provide a favorable talent guarantee for the company's future expansion. Conclusion: We are strongly optimistic about the company's A-share sales intention. The company's 20 years of focus on psychiatry, having the largest psychiatric service team in China, and various acts of kindness for disadvantaged groups in society have shown the company's strong confidence in chain psychiatry and the Chinese private psychiatric care industry. If the company successfully implements the A-share sale and goes through the test of the AH capital market, it will surely strongly enhance the company's brand influence and directly benefit the company's current asset-light medical service chain network expansion plan. In view of the first five months of 2016, 4 institutions (480 beds) have already been put into operation, and at least 4 new hospitals will be in operation before the end of the year. We expect the company's revenue from 2016 to 2017 to be 430 million yuan and 550 million yuan respectively, with growth rates of 25.19% and 31.17% respectively, net profit growth rates of 54% and 34%, respectively, and earnings per share of 1.18 yuan and 1.59 yuan respectively, corresponding price-earnings ratios of 28.89 times and 21.43 times. Maintain a “Highly Recommended” rating.