The company issued an announcement and signed a strategic cooperation agreement announcement with the Yunnan Provincial Government. The agreement reached a strategic cooperation agreement in five major areas: 1) Integration of Chinese medicine resources: building an important standardized cultivation and breeding base for Chinese herbal medicines; 2) “Internet + Medical †project: building an Internet medical health service platform and a city smart pharmacy center; 3) Public hospital acquisition and public hospital pharmacy trusteeship project: In accordance with the relevant policies of the national public hospital reform, integrate the resources of the medical industry chain and encourage the company to participate in the pharmacy trusteeship cooperation of provincial public hospitals; 4) Modern medicinal materials (fragrance) modern logistics center project: to build a distribution center for Chinese herbal medicines and spices for Southeast Asia and Southeast Asia; 5) “Smart Health + Tourism†Project: Integrate Yunnan's unique tourism resources and build a “Great Health + Tourism†base. From the provincial cooperation in Qinghai to Yunnan, build a comprehensive intelligent medical service platform. Since the company signed a strategic cooperation agreement with the Qinghai Provincial People's Government last year, the company once again joined hands with the Yunnan Provincial People's Government and became the only listed company on the market that can cooperate with two provincial-level people's governments to build a provincial-level Internet health platform. In addition to the Yunnan and Qinghai provincial governments, the company also signed strategic framework agreements in Puning City, Guangdong, Pu'er City, Yunnan, Yulin City, Guangxi, and Shenzhen Baoan District, to comprehensively deploy a smart medical service platform. We believe that the company cooperates with several municipal and provincial governments, indicating that the Internet medical service platform project is expected to be replicated and expanded nationwide. The company relies on its exclusive third-party online hospital platform pilot qualification and the second domestic online hospital license. It is expected to bring offline hospital resources online and provide legal and compliant B2C remote diagnosis and health consultation services to build a comprehensive intelligent medical service platform. The area of ​​smart pharmacy expansion and upgrading, pharmacy hosting will enjoy the medical reform dividend. Kangmei Smart Pharmacy has solved the problem of prescription source and medical insurance payment in the form of urban central pharmacy. It has been deployed in central cities such as Guangzhou, Shenzhen and Beijing. The annual report disclosed that the company's smart pharmacy has reached 5,000 prescriptions per day, with a total of 400,000 prescriptions, more than 10,000 outpatient doctors, and 150,000 patients. We believe that the smart pharmacy will be recognized and endorsed by the provincial government, and it is expected to be rapidly promoted in Yunnan Province and other provinces and cities, marking the expansion and upgrading of the region. Under the medical reform of the three medical associations, pharmacy trusteeship has become an inevitable trend. The company's full participation in the reform of public hospitals in Yunnan Province and pharmacy trusteeship will continue to expand the company's network layout in medical services, supplement and improve the company's Internet medical layout, and enjoy the medicine. Dividend policy dividends. Earnings forecasts and investment advice. After considering the issuance of diluted shares, we expect EPS to be 0.68 yuan, 0.86 yuan, and 1.04 yuan in 2016-2018, respectively. Corresponding to the current stock price PE of 22 times, 18 times and 15 times respectively, we believe that the company is expected to maintain the advantage of relying on the whole industry chain. Fast endogenous growth, the current valuation has a margin of safety. At the same time, considering the strategic layout of “Great Health + Large Platform + Big Data + Big Serviceâ€, the company has broad prospects for future development, so it maintains a “Buy†rating. Risk warning: The risk of the strategic framework being implemented or not expected; the risk of a smart pharmacy promotion or lower than expected; the financial leasing progress or lower than expected. Puyang Linshi Medical Supplies Co., Ltd. , https://www.linshimedicals.com