The company has invested in the construction of a medical service system. At present, Pingyin County Hospital and Hefei Southeast Orthopaedic Hospital have been put into operation, the Hemodialysis Center has developed rapidly, and medical device revenue has increased. The infrastructure construction of the hospital in the early stage, personnel training and other projects have large investment and long construction period. The expenditure on construction in the first three quarters increased. At the end of the third quarter, the assets under construction were 795 million yuan, an increase of 223 million yuan from the beginning of the year. At present, the medical service sector has not yet achieved profitability, which has caused the company's overall gross profit margin to decline and its performance to be under pressure.

The pharmaceutical equipment market has shrunk and the development of related businesses has been hindered: the pharmaceutical equipment market has been affected by the completion of GMP transformation, and has entered a trough since 2015. There is no obvious sign of recovery at this stage. The pharmaceutical equipment business cycle is expected to continue to shrink in the company's pharmaceutical equipment sector this year. The company launched pharmaceutical equipment-related consumables, with higher gross profit margin than pharmaceutical equipment and creating new profit growth points.

The development of the subsidiary is stable: the subsidiary Changchun Boxun has a stable performance. This year, the new plant will be replaced, the hidden dangers will be eliminated, and the production capacity will be expanded. In 2016, revenue will be affected to some extent by the impact of factory relocation and production suspension, and is expected to fall slightly. As Shanghai Bingcheng and Shanghai Fangcheng separated from Shanghai Taimei as a subsidiary of Xinhua Medical, the performance of Shanghai Taimei decreased year-on-year.

The company participated in the establishment of an investment company: the company plans to invest 150 million yuan in a phased investment with China Cinda to establish a Daxin Xinhua Medical Investment Partnership, with a total investment of 1.01 billion yuan. The new company is committed to investing in health services such as medical services, medical devices, and life sciences. The company can make full use of the professional investment experience and perfect risk control system of the partner team to improve the professionalism of investment target and investment prospect analysis, improve the scientific nature of decision-making, timely discover high-quality investment targets, and cultivate new performance growth points.

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