The announcement announced a strategic cooperation with Henan University of Traditional Chinese Medicine to lay out traditional Chinese medicine in three dimensions. The company signed a “Framework Agreement on Strategic Cooperation in Traditional Chinese Medicine” with Henan University of Traditional Chinese Medicine to realize the transformation of scientific research results, cooperative research and development of traditional Chinese medicine, strategic resource sharing, and a three-dimensional layout of traditional Chinese medicine. Tongjuntang was used as a platform to set up traditional Chinese medicine clinics inside and outside of Henan Province. Tongjuntang is a century-old traditional Chinese medicine enterprise in Zhejiang. It has rich traditional Chinese medicine prescriptions and brand resources, not just Chinese medicine tablet processing. In the future, experts from Henan University of Traditional Chinese Medicine will use the Tongjuntang Traditional Chinese Medicine Center as a platform to carry out clinical consultations and various traditional Chinese medicine diagnosis and treatment programs, making Tongjuntang a traditional Chinese medicine chain platform with characteristic time-honored brands as its heritage, high-quality experts and drugs, and open up space for the development of traditional Chinese medicine services. The Chinese medicine tablet business is expected to enter the Henan market. Tongjuntang has formed an excellent Chinese medicine tablet product line, and its premium tablets have covered most traditional Chinese medicine hospitals and many of the top three general hospitals in Zhejiang Province. With the commercial resources of Tailong Pharmaceutical in Henan Province, as well as the Henan College of Traditional Chinese Medicine and its affiliated hospitals (its three affiliated traditional Chinese medicine hospitals, with annual tablet consumption of around 400 million yuan), Tongjuntang is expected to expand the tablet business to Henan Province and open up new growth space. Build a complete industrial chain for traditional Chinese medicine tablets. Most of the raw materials for Tongjuntang tablets are outsourced. The announcement stated that the two sides will jointly explore a cooperative model for the construction of standardized planting bases for Chinese herbal medicines. We believe that in the future, it is hoped that they will gradually establish their own planting bases, build a complete beverage industry chain, and achieve a high-quality drink enterprise integrating cultivation, processing, and terminal sales. The mergers and acquisitions and additional shares were completed, entering a new era of development. All acquisitions and additional shares of Tongjuntang and the new leader have been completed. Management has also used this to achieve shareholding, and the company has entered a new era of development. The transformation from traditional Chinese medicine oral liquid to a new business framework combining traditional Chinese medicine tablets, pre-clinical CRO, and traditional Chinese medicine main business has achieved the first step in epitaxial expansion. The new leader is a high-quality clinical CRO enterprise in China. At present, cooperative relationships have been established with most of the top 50 domestic pharmaceutical companies, including Shuanghe, Luo Xin, and Ruiyang. The company mainly provides pre-clinical services, can independently detect new drug development trends, quickly help domestic pharmaceutical companies carry out research and development, and reduce the R&D time span. It is expected to enter the field of innovative pharmaceuticals in the future, using the platforms of listed companies to further integrate industry resources and expand business. Revenue is expected to be close to 70 million yuan in 2014, there are plenty of orders in hand, and the company designs incentives for its management in additional distribution plans. We believe that the company's performance growth is expected to exceed the guaranteed level of performance promises. There is huge potential for Tongjuntang to increase its profit level and scale. Currently, according to reports from commercial companies, Tong Juntang is unable to enjoy various support policies for the beverage industry, such as preferential tax rates, etc. It is expected that the change in the nature of the company will be completed in the near future. At the same time, it was previously limited by shareholders' capital strength and was unable to meet their financing development needs. After entering Tailong, there will be full financing guarantees to help them expand production capacity and break geographical limitations. Furthermore, Tongjuntang's current net profit margin is only about 5.4%, which is significantly lower than that of the industry, so there is considerable room for improvement in the future. Prescription drugs for major diseases are expected to be deployed in the future. We believe that as an excellent preclinical CRO enterprise in China, Xinling has rich resources centered on new drug research and development, which will help the company seek excellent prescription drug types and gradually achieve a layout in the field of prescription drugs for major diseases. Set up an investment platform to begin epitaxial expansion. In January 2015, the company announced the establishment of Tailong Health Industry Investment Co., Ltd. as a joint venture with Zhongsheng Group (controlling shareholder) and Shandong International Trust. It will seek external tenders for the company through various methods such as cooperating with professional investment institutions to establish M&A funds for different sectors, acquisition+nurture high-quality projects in the big health industry, etc. We believe that the joint Shandong Trust will use its project operation experience to improve operational efficiency, and that the company's multi-dimensional expansion logic is gradually becoming apparent. Traditional Chinese medicine oral liquid is gradually being eliminated, and sales improvements can be expected. The original main business was traditional Chinese medicine oral liquid. Currently, it is divided into two marketing lines: OTC and hospital. Among them, the OTC traditional channel team has about 500 people, and is responsible for the normal double huanglian and 10 concentrated types, and the investment promotion team is responsible for the large packaging of the children's double huanglian and double golden lotus. The hospital team consists of about 200 people and is responsible for concentrating 12 sticks and other common medicine varieties in Shuanghuanglian. The company introduced excellent sales personnel through self-revision, trustworthiness, etc., and provided appropriate incentives. As channel inventory was cleared and sales investment increased, the main business would gradually break out of the trough. The main business continues to be rich in variety, and pharmaceuticals suitable for the current team are selected. The company announced in February that it has acquired Jiangxi Shimei Pharmaceutical's Paediatric Compound Chicken Inner Gold chewable tablets, which are exclusive products, OTC Class A products, and the latest winning bid price of 12 tablets is about 33-36 yuan. The function of this product is to strengthen the spleen and appetite, digestion and accumulation. It is used in children due to bloating, stagnation in eating, and vomiting and diarrhea due to upset spleen and stomach. We believe that this variety has a high degree of correlation with the company's existing channels and departments of traditional Chinese medicine oral liquid, which is conducive to leveraging the existing team and enriching the OTC variety line. Disposal of redundant assets is on the agenda. The company set up two subsidiaries at the end of 2014 to inject two vacant plants in the Zhengzhou Development Zone and Gongyi Industrial Park to facilitate subsequent disposal. The annual loss of the Gongyi Grand Infusion is about 30 million yuan. If it is divested or disposed of in other ways, not only can losses be drastically reduced, but considerable one-time profits can also be obtained. Profit forecasts and investment ratings. The company's mergers and acquisitions and additional shares have been completed. We forecast that the EPS for 14-16 will be 0.06, 0.17, and 0.27 yuan, and the corresponding PE will be 232, 76, and 48 times, with a year-on-year growth rate of -9.56%, 204.82%, and 57.74%. It should be pointed out in particular that the new leader and Tong Juntang were included in the company's profit statement after completing the delivery in March 2015. Previously, profits were included in the company's statements in terms of assets. Therefore, only 75% of the annual results of both New Leading and Tongjuntang in 2015 were included in the profit statements of listed companies. According to actual performance, the net profit for 15 years was 114 million yuan, corresponding to EPS of 0.20 yuan, and PE 66 times. A “Highly Recommended” rating was given for the first time. Risk warning: There is some uncertainty about the progress of epitaxial expansion, and Tongjuntang's new business development falls short of expectations.