According to the 2010 three-quarter report, the company achieved operating income of 52.33 million yuan, an increase of 22.18% over the previous year; operating profit of 12.94 million yuan, an increase of 44.79% over the previous year; net profit attributable to the parent company of 12.95 million yuan, an increase of 29.68% over the previous year, and earnings per diluted share of 0.08 yuan. The company expects net profit attributable to the parent company to increase 30% to 50% year over year in 2010. The overall gross margin declined, and the ability to control expenses during the period weakened. During the reporting period, the company's consolidated gross margin was 54.56%, a year-on-year decrease of 5.44 percentage points. The main reason is that the increase in the price of raw materials for the company's main products led to a 38.79% year-on-year increase in operating costs, which is higher than the growth rate of operating income. From January to September 2010, the company's fee rate for the period was 49.82%, up 3.86 percentage points from the previous year. Among them, the sales expense ratio increased 2.09 percentage points to 24.98%; the management expense ratio decreased by 0.01 percentage points to 23.37%; and the financial expenses ratio increased 1.79 percentage points to 1.47% year on year, mainly due to the company's increase in loan interest payments of 30 million yuan. Investment income of Jinsha Pharmaceutical became the company's main source of profit. The company owns 35.53% of the shares in Jinsha Pharmaceutical. From January to September 2010, according to the investment ratio, the company confirmed that investment income increased by 225.52% year-on-year to 10.89 million yuan, accounting for 84.16% of the company's operating profit. Excluding investment income from Jinsha Pharmaceutical, the company's operating profit was 2.05 million yuan, a year-on-year decrease of 63.30%. Looking at each product, it is difficult to compete with big brands such as Golden Throat, Watermelon Cream, and Herbal Coral Pills, etc., and competitiveness is relatively insufficient; competition in the field of traditional Chinese medicine and cold medicine is fierce, and the market share is low and gross margin is declining year by year, so the company's main business prospects are worrying. The Chinese medicine industry has ushered in development opportunities, and companies will benefit from them. With the introduction of “Certain Opinions on Promoting and Supporting the Development of Traditional Chinese Medicine” and the continuous deepening of new medical reform policies, the traditional Chinese medicine industry has ushered in the best development opportunities in history. The company's leading product, Duofengfeng, is subject to national patent protection, national traditional Chinese medicine protection, and exclusive production varieties. The leading products of the participating company Jinsha Pharmaceutical are all included in the National Essential Drug Catalogue and the National Basic Medical Insurance Medication Catalogue. They belong to the national traditional Chinese medicine protection and the country's exclusive production varieties. This round of policy support is conducive to stimulating the volume growth of the company's leading products. Furthermore, Jinsha Pharmaceutical will also benefit from policy support to accelerate growth and contribute higher investment returns to the company. Earnings forecasts and ratings. We expect the company's earnings per share for 2010-2012 to be 0.11 yuan, 0.13 yuan, and 0.14 yuan, respectively, corresponding to the closing price of 15.98 yuan on the previous trading day. The dynamic price-earnings ratio is 145 times, 123 times, and 114 times, respectively. The current valuation is too high, and we maintain the company's “neutral” investment rating.