The company announced that it intends to purchase 100% of the shares of Changbaishan Huangfeng Ginseng Co., Ltd. by a combination of issuing shares and paying cash. Among them, 75.58% of the transaction consideration was paid by issuing shares, with an amount of 27,58792 million yuan, corresponding to the issuance of 19,131,696 shares, with an issue price of 14.42 yuan/share; the remaining 24.42% of the cash is intended to be raised by issuing shares to no more than 10 other specific investors (the issue price is 12.98 yuan/share, corresponding to no more than 8,089,368 shares, and the total supporting capital is not more than 105 million yuan). The estimated 100% equity value of Huangfeng Jinye, which is the subject of this acquisition, is $365 million. The total number of shares to be issued is expected to be no more than 27,221,064 shares. The main point of view is that with the acquisition of Huangfeng Ginseng for 1365 million yuan, the development of the ginseng business sector will accelerate. Huangfeng Ginseng was founded in December 2009 with ginseng as the core of business development. Its main business is the cultivation of ginseng, the R&D, production and sales of ginseng tablets, ginseng food, health products, and cosmetics. The product category includes three aspects: red ginseng, deep processed ginseng products, and ginseng cosmetics. The target business of the acquisition is in line with the company's ginseng sector development strategy and makes up for the company's shortcomings in the downstream area of the industrial chain. Through absorption and integration of the Huangfeng ginseng industry, the company will become a company in the entire ginseng industry chain, from cultivation to processing, from tablets to cosmetics, health products, and food. The ginseng business segment is expected to become the core contributor to the company's profit over the next 3 years. 2. “Forest ginseng+non-forest ginseng” is a two-pronged approach, and the performance promises of the acquisition target guarantee profits. As one of the leading enterprises in the ginseng industry, Huangfeng Ginseng has deep traditional cultural connotations and brand advantages. It mainly uses a woodland ginseng cultivation model. Currently, it has a ginseng planting base of about 1,000 acres. Since 2010, Jilin Province has controlled a net increase in the area of harvested land used to grow ginseng every year to less than 1,000 hectares: 1) Relying on its own advantages, the company will receive a certain amount of support from the government in the future in the woodland ginseng planting program; 2) At the same time, it fully relies on Yisheng Pharmaceutical's successful experience and technology in non-forest ginseng cultivation to avoid policy risks in woodland ginseng and non-forest ginseng to provide a double guarantee of raw materials. As a major shareholder holding 40% of Huangfeng Zhen Ye's shares, China Corfu promised that the net profit attributable to the owners of the parent company achieved by Huangfeng Participant in 2014, 2015, and 2016 would not be less than 23 million yuan, 27 million yuan, and 32 million yuan. After the share exchange, China Corfu held 10.12 million shares of listed companies, which were highly consistent with the interests of listed companies, and promised that performance would be fully guaranteed. 3. Non-forest ginseng cultivation techniques have been verified, and participating in the bee industry has created a major health industry. The company harvested 147 mu of non-forest ginseng last year, with a total output of 96 tons, with an average yield of about 653 kg per mu. It is expected that the ginseng harvest area will continue to increase to more than 400 mu this year, and the company's non-forest ginseng cultivation techniques will be further tested; furthermore, the company continues to increase promotion efforts in major health industries such as participation in the industry and bee industry to create new growth points. 4. Investment advice: “Recommended”. The company has opened up the ginseng industry chain through the acquisition of Huangfeng Ginseng. At the same time, the company has mastered the core technology of non-woodland ginseng cultivation. The continuous rise in ginseng prices highlights the strategic advantages of non-woodland ginseng cultivation, and the layout of the entire ginseng industry chain is huge. The market space is huge, and the “bee industry+participation industry” provides the company with broad development space. Without considering the impact of the acquisition target, we expect the company's 2014-2016 EPS to be 0.31/0.36/0.42 yuan, respectively, and the corresponding PE is 40X/35X and 30X (if the effects are taken into account, the 2014-2016 EPS is expected to be 0.36/0.41/0.47 yuan, and the corresponding PE is 35X/31X and 26X), giving it a “recommended” rating. Risk Tip 1. The acquisition progress fell short of anticipated risk. 2. Fluctuations in raw material prices and risks in ginseng cultivation.