Key investment points: Inter Group is the second-largest pharmaceutical distribution enterprise in Zhejiang Province. Its market share is only slightly lower than Huadong Pharmaceutical. Its subsidiary Inter Pharmaceutical (50% of the company's holding shares) is its main operating entity. Pharmaceutical distribution mergers and restructuring are accelerating, and full coverage within the province is beginning to take shape. Since 2010, the company has successively acquired or planned to acquire Ningbo Cixi Pharmaceutical (already renamed Ningbo Inter Pharmaceutical), Wenzhou Supply and Marketing, and Quzhou Hays Pharmaceuticals, and plans to establish modern pharmaceutical distribution centers in Cixi, Ningbo and Linhai, Taizhou. Coupled with the long-term accumulation of the company's traditional dominant region, the Hangjiahu region, the full coverage of Inter Pharmaceuticals in the province has begun to take shape, and its radiation influence on medical institutions in the province has been further strengthened. The company plans to further improve its commercial layout in the province. Currently, the sale of the company's Intel property is nearing completion, which will bring huge cash flow to the company, further support the company's business expansion, and the merger and restructuring process will continue to accelerate. Based on the Zhejiang market, the company's business expansion is highly flexible. The “2010-2015 National Pharmaceutical Distribution Industry Development Plan” is about to be launched, and it is imperative to increase the concentration of the pharmaceutical distribution industry. With the continuous promotion of policies, the pharmaceutical distribution industry has reached the peak of mergers and restructuring. The merger and restructuring of the company is based in the Zhejiang market and focuses on deep cultivation on its own site. Since drug bidding and distribution are based on provincial units, the company's mergers and acquisitions within the provincial level clearly have more synergy effects, which is conducive to subsequent business integration, and has greater performance flexibility in the wave of mergers and restructuring of the industry. Taking Wenzhou supply and marketing as an example, it will serve as the company's business integration platform in the Wenzhou region to achieve optimal allocation of resources, improve distribution efficiency, and help increase net interest rates. The company's operating efficiency continues to be at a high level. In the company's development process, the company's positioning is very clear, that is, it is characterized by being famous and new, and striving to maintain variety advantages. Famous new specialty drugs are mainly aimed at hospitals above level 2. The unit price is often high, the price fluctuation is small, and the corresponding cost ratio is small. Therefore, the company has maintained a high level of profit, the net interest rate is at the leading level in the industry, and is showing a steady upward trend. Furthermore, the company's per capita sales reached 8.08 million yuan in 2009, second only to Sinopharm shares with a large commercial allocation ratio among listed domestic pharmaceutical distribution companies. It is comparable to Shanghai Pharmaceutical, showing good operating efficiency. The pharmaceutical base market may become a new driving force for the company's performance growth. The company is vigorously developing the essential drug market, and plans to acquire municipal pharmaceutical commercial enterprises in mainland China (such as Hays Pharmaceuticals, etc.), gradually sinking channels. Considering the successive introduction of the country's two major policies for the essential drug market, the essential drug procurement mechanism and the compensation mechanism for primary medical institutions, we believe that once the policy is implemented, the two major obstacles to the promotion of the essential drug system (inadequate compensation by primary medical institutions and chaotic bidding for essential drugs) will be broken through, and the basic drug market may show a volume trend in the next 2-3 years. Taking Zhejiang Province as an example, essential drugs account for about 20% of the total pharmaceutical market, or about 10 billion dollars. The company has only just started, and the market space is still huge, and it is expected to become a new engine for performance growth. Profit forecasts and investment ratings do not take into account Intel property disposal proceeds, and are calculated based on the Wenzhou Supply and Marketing Consolidated Statement in early 2011. We predict that Intet Group EPS for 2010-2012 will be 0.20 yuan, 0.27 yuan, and 0.38 yuan, respectively. We believe that the company is based on the Zhejiang market, endogenous growth is clear, and epitaxial expansion continues to accelerate. In 2009, the market share in the province was only 11%, there is huge room for growth, and it will have strong performance flexibility in the future in the wave of mergers and restructuring of the industry. Therefore, we maintain the company's “buy” investment rating, with a target price of 13.64 yuan for 6 months. Risk warning: progress in epitaxial mergers and acquisitions is slow; drug price regulation exceeds expectations; basic drug policies are not in place.