Expanding the traditional Chinese medicine industry is conducive to increasing the level of profit. Currently, the company's traditional Chinese medicine business mainly uses Qianwang Traditional Chinese Medicine as a platform. It is mainly engaged in the initial processing and sale of health-care Chinese herbal medicines. The scale is relatively small, and the sales scale was less than 100 million in 2009. However, in statistics by product, the gross margin of traditional Chinese medicine sales was the highest, reaching 19.52%, higher than other pharmaceuticals (4.43%) and medical devices (16.42%). In the future, the company will use Yingkai Property as a platform for the Chinese medicine industry, integrate assets and businesses related to Qianwang Traditional Chinese Medicine, etc., and gradually build an “industrial base with scientific research as the lead, refined production of traditional Chinese medicine, brand marketing and sales of Chinese medicine tablets as the center, and health and wellness as the two wings”, which is equivalent to further expanding the business scale and increasing the added value of products on the basis of Qianwang Traditional Chinese Medicine, which is conducive to increasing the company's overall profit level. Furthermore, I expect that the Kangqiao Pharmaceutical Industrial Base where Qianwang Traditional Chinese Medicine is located (currently its main function is processing Chinese medicine tablets and modern pharmaceutical logistics) will all be used to build the company's pharmaceutical logistics center, further enhancing the company's core competitiveness in logistics distribution. Further focus on the main pharmaceutical business. Previously, the company had announced that it would sell three properties, including Inter Property, Yinghua Property, and Yingchen Property. Now, with the transformation of Yingkai Property, the company's property management business will be completely withdrawn, thus further highlighting the main pharmaceutical business. Moreover, the huge amount of capital obtained from the sale of the property will support the subsequent epitaxial expansion of the pharmaceutical commercial business and enhance channel control. The differentiated competition strategy is clear, and the leading position is expected to be further consolidated. In response to the rapid expansion of the top three pharmaceutical businesses of Sinopharm, Shanghai Pharmaceutical, and China Resources across the country, Inter Pharmaceuticals, as the leading pharmaceutical business in Zhejiang Province, must plan ahead. Implementing a differentiated competition strategy is a wise move. The current Chinese medicine industry strategy and the previous pharmaceutical logistics strategy (the construction of a pharmaceutical logistics center in Linhai, which was announced earlier) are the core elements of differentiated competition: on the one hand, pharmaceutical business giants mainly use proprietary medicines and prescription drugs, and pay less attention to highly localized traditional Chinese medicine tablets and health-care traditional Chinese medicines; on the other hand, pharmaceutical business giants still have a shallow foundation in the Zhejiang market and lack sufficient logistics and distribution capabilities. We believe that by implementing differentiated competition, Inter Pharmaceuticals's first-mover advantage in the Zhejiang market will be further consolidated. Profit forecast and investment rating: For the time being, we maintain our previous profit forecast, that is, without considering epitaxial expansion, Inter Group achieved EPS of 0.21 yuan, 0.27 yuan, and 0.38 yuan respectively in 2010-2012. We believe that the company is based in the Zhejiang market, has consolidated its leading position, and will have strong performance flexibility in the future in the wave of mergers and restructuring of the industry. With the beginning of the terminal channel battle triggered by Shanghai Pharmaceutical's acquisition of CITIC Pharmaceuticals and China Resources's acquisition of Suzhou Li'an, the valuation of pharmaceutical commercial companies is expected to soar. The current market value of only 2.3 billion yuan does not reflect the company's huge terminal channel value and acquisition value. Therefore, we continue to maintain the company's “buy” investment rating, and the target price for 6 months was raised to 16.35 yuan. Risk warning: epitaxial mergers and acquisitions are progressing slowly; drug price regulation exceeds expectations.