Key investment performance declined slightly: in 2015, the company achieved revenue of 1,465 billion yuan, a year-on-year decrease of 3.90%; realized net profit attributable to shareholders of listed companies of 177 million yuan, a year-on-year decrease of 9.91%. Among them, the pharmaceutical manufacturing business segment achieved revenue of 776 million yuan, a year-on-year decrease of 9.98%. The main reason was that in the early stages, distributors in the Guangdong market were optimistic about the company's anti-viral oral liquid and pentane root granules, and there was a lot of inventory. In 2015, some distributors had high inventory pressure, concentrated on removing inventory in the third and fourth quarters, leading to revenue of antiviral oral liquid and pentane root granules of 411 million yuan and 56.218,500 yuan, respectively, year-on-year decreases of 22.19% and 36.59%. As of the first quarter of 2016, the channel inventory for the above two products has been basically processed, and sales are expected to improve in 2016. The Orange and Red series products achieved revenue of 187 million yuan, an increase of 24.72% over the previous year, showing a good trend of rapid increase in volume and price. Boosting the Chinese herbal medicine sector: In 2015, the company's Chinese medicine tablet business maintained steady growth, achieving revenue of 395 million yuan, an increase of 15.37% over the previous year. In March 2016, the company signed an “Share Transfer Agreement” with Hubei Qingsong Chaoyue Pharmaceutical Investment Co., Ltd., Hubei Tianji, Ji Qingsong, and Han Suying to acquire 55% of Hubei Tianji's shares held by Hubei Qingsong with RMB 358 million. Hubei Qingsong promised that from 2016 to 2018, Hubei Tianji will achieve net profit of no less than 47.5 million yuan, 52.25 million yuan, and 57.48 million yuan after deduction. Furthermore, the company signed a “Cooperation Framework Memorandum” with Anhui Dechang Pharmaceutical. The final implementation of the project will help the company further expand the Chinese medicine tablet market. Frontier technology strategic layout: Based on the existing TCR-T precision medicine research and development platform of the Xiangxue Life Science Research Center (xLifeSC), the company focuses on developing a new generation of new biological drugs for the treatment of tumors, viral infections, and autoimmune diseases with internationally leading high-affinity TCR patents as the core technology, and cooperates with clinical units to carry out clinical research and application of third-class medical technology such as specific T cells and TMHATAC (similar to CART). With Dr. Li Yi, the company jointly established Xiangxue Life Science Co., Ltd. and Guangdong Xiangxue Precision Medical Technology Co., Ltd. actively lays out precision medical technologies such as genetic testing, gene sequencing, and cell therapy to create a modern biomedical research and development base and transformation platform. In 2015, the specific T-cell secondary immunotherapy solid cancer project carried out by the company in cooperation with 458 Hospital completed the first phase of clinical trials. The trial results were ideal, and the second phase of clinical research work will be carried out at an opportunity; the company and Suzhou Shengnuo Biomedical Technology Co., Ltd. completed preclinical research on the new small nucleic acid drug for injection, and entered the rapid review channel of the National Food and Drug Administration Evaluation Center. Profit forecast and investment rating: We forecast that in 2016-2018, the company will achieve operating income of 2.04 billion, 2.51 billion and 3.04 billion yuan respectively, and realized net profit attributable to shareholders of listed companies of 243 million, 315 million and 368 million yuan respectively, corresponding EPS of 0.37 yuan, 0.48 yuan and 0.56 yuan respectively, and corresponding PE of 42.9 times, 33.1 times and 28.3 times respectively. Xiangxue Pharmaceutical (300147) has steady main business performance and a mature marketing model. Establishing a new company to develop the prescription drug market is expected to drive a new round of product sales growth; the complete layout of the entire Chinese medicine resources industry chain is expected to become one of the leading Chinese medicine tablet companies; considering that the economic benefits of the TCR project are expected to gradually be reflected after obtaining clinical application qualifications, we maintain the company's “increase in holdings” rating. Risk warning: risk of raw material price fluctuations, channel integration risk, policy risk.