Basic conclusions, value evaluation and investment recommendations The company's main business is the production and sale of chemical preparations and APIs, which mainly include cardiovascular antihypertensive drugs, broad-spectrum antimicrobials, and hormonal drugs. The company has 112 products entered the national medical insurance catalogue and 55 products have entered the 09 edition of the national essential medicines catalogue. The company's cardiovascular drugs account for 42.75% of sales revenue, accounting for 59.23% of the gross share. The leading cardiovascular products are the antihypertensive drug indapamide tablets, which account for 98% of the cardiovascular category. The company's overall gross profit has remained above 69% and fell to 56.23% in 2009 due to the impact of the real estate business, but with the exit of the real estate business, the gross margin will gradually stabilize. Cardiovascular and antihypertensive drugs are a large market that is growing rapidly. Currently, the average growth rate of the overall cardiovascular and cerebrovascular drug market in China is 20.84%. However, there are many types of cardiovascular and cerebrovascular drugs, and competition is relatively fierce. The variety of companies has certain advantages in certain fields due to their pre-emptive advantages and excellent curative effects. The company's antihypertensive drug “Subisan” indapamide tablets have annual sales of 247 million yuan, with a market share exceeding 70% over the years. However, since it has been in the market for a long time, the user base is relatively mature, and growth is relatively slow. Other old varieties are facing a similar situation. The essential drug catalogue system that began this year has provided an opportunity for the company's revenue growth to accelerate. The company's highly profitable varieties, including indapamide tablets, have entered the catalogue, and the company's products are of high quality and low cost and suitable for basic market use. With the introduction of a catalogue of essential medicines, the company is expected to see an increase in sales volume. The capital raised by the company this time is mainly used for the chemical raw materials and formulation production projects of the subsidiary COVID-19 Pharmaceuticals and the wholly-owned acquisition of 48% of the shares in Biochemical Pharmaceuticals. As a general medicine manufacturer, the company faces an opportunity for general medicine sales to continue to rise with the introduction of new agricultural cooperation and medical insurance for urban residents. The launch of a new product, compound indapamide tablets, will also further stimulate product sales. We forecast the company's diluted EPS in 2010, 2011, and 2012 to be 0.978 yuan, 1.225 yuan, and 1.485 yuan, up 15%, 25%, and 21% year on year. The company is a general medicine manufacturer. Referring to the average valuation of the pharmaceutical sector, we gave the company 30-35 times PE in 2010, corresponding to a reasonable target price of 29.33-34.22 yuan.