Investment Highlights Announcement Tailong Jinmao M&A Fund plans to invest in Wuxi Hebang Biotech to distribute protein and peptide drugs. The Tailong Jinmao M&A Fund established by the company signed an “Equity Cooperation Framework Agreement” with Yang Jianliang, chairman of Wuxi Hebang Biotech on June 4, marking a substantial step in the company's extended development using M&A funds as a platform. Mr. Yang Jianliang is a well-known biopharmaceutical expert. Chairman Yang Jianliang has worked at Biogen for virus control and cancer treatment research and development. After returning to China, he worked as the technical director of the China Biochemical Pharmaceutical Department of the American Union Group (New York) and Xinbao Pharmaceutical Company of the China Livzon Group, where he was responsible for developing genetically engineered interferons and desensitizing drugs for allergic asthma. The company focuses on the development of protein and peptide drugs such as diabetes and osteoporosis. Hebang focuses on protein and peptide drug development. Its human serum albumin fusion technology research and development platform provides a good foundation for subsequent new drug development: 1) it can improve the stability and solubility of drugs; 2) due to the increase in molecular weight, the glomerular filtration rate decreases, the half-life of the drug is extended, drug usage is reduced, and side effects are reduced; 3) it is injected once every 1-2 weeks, making it easy to use. Among them, major varieties of injectable insulin-promoting peptide fusion proteins have received clinical approval. The company's research varieties also include long-acting interferons, long-acting granulocyte-stimulating factors, etc. Shares are gradually being transferred, and it is estimated that 14—150 million yuan will receive no less than 30% of the shares. Tailong Jinmao will acquire shares in Hebang Biotech through gradual transfers and carry out a capital increase. It is estimated that a total investment of about 14—150 million yuan will be invested to obtain no less than 30% of the shares. We believe that Hebang's current shareholders are mainly Mr. Yang Jianliang and several PE companies. The involvement of Tailong Jinmao through shareholding is more conducive to balancing the equity structure and making it bigger and stronger. Disposal of redundant assets is on the agenda. At the end of 2014, the company set up two subsidiaries to inject two vacant plant blocks in the Zhengzhou Development Zone and Gongyi Industrial Park to facilitate subsequent removal and disposal. The annual loss of the Gongyi Grand Infusion is about 30 million yuan. After disposal, 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 15-17 will be 0.17, 0.27, and 0.36 yuan, corresponding PE will be 96, 60, and 47 times, with year-on-year growth rates of 204.82%, 57.74%, and 30.15%. 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 EPS was 0.20 yuan, and PE was 80 times higher. Maintain a “Highly Recommended” rating. Risk warning: There is some uncertainty about the progress of epitaxial expansion, and the performance of the main business falls short of expectations.