Incident: The company purchased 100% of Dongli Enterprise Management's shares from specific targets, Cai Bingyang, Zhang Jianhua, and Cai Peng, in the form of issuing shares and paying in cash, at an estimated price of 692 million yuan. Of these, 2/3 were added to the previous three natural persons by 17.544,400 shares, at a price of 26.28 yuan/share; the remaining 1/3 was paid in cash. The cash portion came from adding 2.652,200 shares to Southeast Industrial Holdings, the largest shareholder, raising 78 million yuan in capital, and the remaining portion was settled by self-financing. The acquisition of assets can greatly enhance the company's profitability Cai Bingyang, Zhang Jianhua, and Cai Peng promised that the net profit attributable to the parent company after deducting non-recurring profit and loss from 2015-2017 will not be less than 52 million yuan, 62.4 million yuan, and 77.376 million yuan respectively. The sum of the three-year net profit will not be less than 191.776 million yuan. According to performance promises, we believe that net profit attributable to listed companies will double after consolidation, which can greatly enhance the company's current profitability. The acquisition of Dongli Enterprise Management can enrich the company's pharmaceutical intermediates and APIs Dongli Enterprise Management directly holding 100% of Hong Kong Dongli's shares and 75% of Dongli Chemical's shares, while Hong Kong Dongli directly holds 25% of Dongli Chemical's shares. Dongli Enterprise's core assets are Dongli Chemical, and its main business is pharmaceutical intermediates and chemical intermediates. After the merger and acquisition, it can greatly enhance the scale and market competitiveness of the company's pharmaceutical intermediates and APIs, and promote the company's strategic goal of “using specialty APIs and pharmaceutical intermediates and novel chemical agents as two wings”. In the investment strategy, we raised our forecast for 2015-2017 earnings per share of 0.23 yuan, 0.41 yuan, and 0.60 yuan, respectively, and the corresponding PE was 136 times, 78 times, and 53 times, respectively. Since the company has expanded its scope of business through mergers and acquisitions and its performance is facing an inflection point, we continue to give it a “recommended” rating. Risks suggest that prices of Chinese herbal medicines fluctuate greatly; epitaxial expansion is lower than expected; new product development risks, etc.