Investment Highlights The company released a performance forecast on June 30, saying that the net profit returned to the mother in the first half of 2016 fell by 0% to 20% to 14.187 million yuan to 17.734 million yuan. The transformation was painful until profits fell back to its mother: The company began building a medical service platform in 2015. In July of that year, it was announced that the Zhang County People's Government signed a letter of intent to cooperate in the PPP model to jointly build the Yizhang County Hospital of Traditional Chinese Medicine and officially enter medical services and health management. Currently, the project is progressing smoothly, but it is still in the early planning and construction period, and no profit has been generated. During the transition period, the company increased capital investment and increased the company's bank loans during the reporting period. As a result, the company's financial expenses for the first half of the year increased by about 3.8 million compared to the same period last year. Additionally, non-recurring profit and loss during the reporting period had an impact of about 3.2 million on net profit attributable to mother. After deduction, actual net profit to mother fell by about 10%. We believe that 2015-2016 is a period of transformation for the company. As the PPP project enters the operation period, the company will achieve a recovery in revenue and profit through management fees and supply chain management rights. IVD's core business leads the industry: The company's core business is medical laboratory diagnostic products, traditional products are vacuum blood collection systems, and the company entered the field of immunological diagnosis in '13. 1. Vacuum blood collection system faucet. Since its launch in 2009, vacuum blood collection systems have been an important part of the company's leading products and source of profit. According to the 2015 annual report, vacuum blood collection systems have reached 10% of the domestic market, and the coverage rate of the top three hospitals in Guangdong is 70%. 2. POCT immunodiagnosis can be expected in the future. Relying on vacuum blood collection systems, the company continues to be deeply involved in the POCT field and entered the field of immunodiagnosis in 2013. At present, the company has independently developed and put into production a first-generation quantitative fluorescence analyzer, and the supporting cardiac markers and infection source detection reagents have obtained CFDA registration certification. POCT is suitable and complies with the hierarchical diagnosis and treatment policy promoted by the country due to its convenient and rapid testing and high accuracy. The POCT market is about to explode. Investment advice: Our company predicts earnings per share of $0.15, 0.16, and 0.28 for 2016 to 2018, respectively. Considering business progress in the second half of the year and the company's expansion in emerging businesses, a proposal was given to increase holdings. The target price for 6 months is 17.3 yuan, which is equivalent to a dynamic price-earnings ratio of 108 times that of 2017. Risk warning: PPP financing risk, policy fluctuation risk, new product development risk