Guhan Health Jing is deeply involved in the Hunan provincial market. In 2010, after the company withdrew its agency rights, the company's performance changed radically. In 2011, the company achieved sales revenue of 250 million yuan of health essence, an increase of 18.14% over the previous year. Currently, the company is actively expanding health essence outside of the province. Since promotion outside the province is still in the trial stage, and due to differences in local supplements habits, progress is slightly lower than expected. In the short term, Hunan Province will continue to be the main source of revenue and profit for health essence. Through deep cultivation in the provincial market, it is expected that the revenue growth of health essence will remain around 20% in recent years. Big infusion products focusing on big infusion industry companies once had a glorious history, and their products were famous both inside and outside the province. However, since the company did not include the Western medicine business as a development priority, the Western medicine business has remained at around 90 million for the past three years, accounting for about 26% of revenue, and gross profit has declined to 22% in 2011. The Western medicine business has been in a state of loss. After the harsh drug bidding price war in various provinces and cities in 2011, the company believes that by investing in the major infusion industry at this time, it will be able to fully enjoy the development opportunities after the industry is reshuffled. The company plans to increase the number of large infusions from the current 100 million (bags/bottles) to about 700 million bags in the future. Due to the low base of the Western medicine business, the growth rate is expected to reach 50-80% in the future. The sale of Nanyue Pharmaceutical increased its 12-year performance in May 2012, and Hainan Hanson won Nanyue Pharmaceutical at a price of 182 million yuan. Nanyue Pharmaceutical's main products are human albumin and hydrogenol. Although they have historically contributed a lot of investment income to the company (more than 20 million yuan in 2011), the decision to sell them was made because the dispute between the company and Jingda Biotech over Nanyue Pharmaceutical's equity involved a lot of energy, and the business risk of biological products was high, so the decision to sell them was made. It is expected that the 2012 performance will increase by about 0.54 yuan. Investment advice: Within the next six months, companies that maintain the “outperform the market” rating will achieve earnings of 0.36 yuan per share in 11 years, which is expected to be 1.02 yuan. Based on the closing price of 14.48 yuan on June 27, static and dynamic PE will be 40.76 times and 14.21 times, respectively, while the 12-year PE after excluding investment income is about 30 times. The median price-earnings ratio of listed Chinese medicine companies in '11 and '12 was 32.63 times and 25.84 times, respectively. By digging deeper into the potential of the local market, Guhan Health Essence, the company's leading traditional Chinese medicine product, is expected to maintain steady growth. As the company puts the major infusion business on the development schedule, the company is expected to form a development model combining traditional Chinese medicine and Western medicine in the future. We are optimistic about the company's future development prospects and maintain the “outperform the market” rating.