From January to September 2009, the company's operating income was 188 million yuan, up 11.90% from the same period last year; operating profit was 16.0522 million yuan, up 42.71% from the same period last year; net profit belonging to the owner of the parent company was 13.4567 million yuan, up 32.06% from the same period last year; and basic earnings per share was 0.15 yuan. From July to September 2009, the company achieved operating income of 68.4299 million yuan, an increase of 14.62% over the same period last year, an increase of 6.85% over the same period last year; operating profit of 6.1075 million yuan, an increase of 95.27% over the same period last year, and an increase of 2.68% over the previous year; the net profit belonging to the owner of the parent company was 4.8445 million yuan, up 52.03% from the same period last year, down 1.24% from the previous year; and basic earnings per share was 0.05yuan.

With the increase of gross profit margin, the company's net profit increases rapidly. From January to September 2009, the company's gross profit margin was 50.19%, up 1.67 percentage points from the same period last year; and 51.09% from July to September, up 2.08 percentage points from the same period last year. The company increased its sales of high-margin products in the second quarter of 2009, with remarkable results. Net profit increased by 36.04% month-on-month. We expect that the sales of high-margin products will increase greatly in 2009, and net profit will increase by about 45% compared with the same period last year.

The sales expenses increase rapidly, the management expenses are well controlled, and the expense rate is stable during the period. The company's sales expenses from January to September 2009 were 57.7595 million yuan, up 29.65% from the same period last year, the sales expense rate was 30.74%, up 4.23% from the same period last year; the management expenses were 16.9645 million yuan, down 20.09% from the same period last year, and the management expense rate was 9.03%, 3.6% lower than the same period last year; the company's bank loans decreased, and interest rates decreased, and the burden of financial expenses was light. The company's expenses for the period from January to September 2009 were 74.3585 million yuan, an increase of 12.71% over the same period last year; the rate of expenses during the period was 39.57%, up 0.32% from the same period last year. During the period of the company, the cost control is better, the management cost is lower, and the expense rate is stable.

The net cash flow of operating activities was negative, and bills receivable increased by 108.85% over the same period last year. Due to the extensive use of notes receivable during the reporting period, the net cash flow of the company's operating activities from January to September 2009 was-5.1057 million yuan, down 280.88% from the same period last year, and bills receivable was 20.9966 million yuan, an increase of 108.85% over the same period last year. There are certain security risks in the company's capital chain.

Technological innovation, the cost is further reduced. The company's revenue from urology drugs accounts for about 18% of the company's income, and its gross profit margin is about 66%. Through process improvement, the company has reduced the cost of its main product, epristeride, by about 47%. The production cost of cardiovascular drug raw materials has also been reduced, which has won more profit space for the company.

Profit forecast and investment rating. We expect the company's earnings per share from 2009 to 2011 to be 0.18,0523 and 0.30. based on yesterday's closing price of 11.08yuan, the dynamic price-to-earnings ratio is 62 times, 48 times and 37 times. The company vigorously promotes high-margin products, during which the expense rate is stable, there are certain risks in the capital chain, and we maintain a "neutral" rating on the company.

Risk hint. As the price of raw materials rises, there is a risk of capital withdrawal.