Incidents: 1. Guangshengtang announced its annual report today: achieved revenue of 313 million yuan, a year-on-year increase of 1.28%; net profit of 66.41 million yuan, a year-on-year decrease of 35.83%; EPS of 0.47 yuan; at the same time, the company announced a profit distribution plan, with a cash dividend of 2.5 yuan (tax included) for every 10 shares. 2. The company released the first quarter results forecast: net profit was 1.94 million yuan to 28.2 million yuan, a decrease of 0-30% over the previous year. Comment: The company's performance declined due to “reduced bidding pressure and increased R&D investment”. On the one hand, the winning bid prices of the company's main products have declined in many regions, and gross margin has declined to varying degrees, which has hampered the growth of the company's performance. By product, Engandin, Agandin, and Heganding achieved revenue of 223 million yuan (+20%), 62 million yuan (-24%), and 27 million yuan (-33%), respectively. On the other hand, the company continues to increase investment in research and development, and cooperates with Pharmacomin Kangde to establish research and development projects for several types of new drugs. This year, the cost of R&D expenditure was about 60.81 million yuan, an increase of 38 million yuan over last year, an increase of 170% over the same period last year. The company's first-quarter results forecast a 0-30% year-on-year decline in net profit, mainly due to an increase of 6 million in cost-based R&D expenses over the same period last year. Tenofovir ester is expected to be approved within the year to add new impetus to the company and greatly improve the elasticity of the company's performance. On February 16 of this year, the product completed the supplementary data review at the Chemical Drug Clinical Division II. Currently, it is awaiting inspection at the production site. We expect it to be approved as the first domestic imitation (hepatitis B indication) within the year. Tenofloxate is the first-line drug for first-time patients and the drug of choice for follow-up treatment of drug-resistant hepatitis B patients. Pregnant patients can also use it safely. It has a wide range of clinical applications and a low mutation rate of drug resistance, so the potential market space is huge. Tenofovir ester was included in the new medical insurance catalogue this year on the basis of the drastic price reduction after price negotiations with the Health Planning Commission last year, providing favorable support for the rapid release of the company's products after the launch and greatly improving the flexibility of the company's performance. The proportion of direct sales continues to rise, and sales channels are constantly being improved. On the one hand, in order to improve terminal control, the company continues to increase the proportion of direct sales (46.85% in 2016). On the other hand, the company recently signed a strategic cooperation agreement with Sinopharm Holdings to achieve double integration of products and channel resources, enhance the terminal coverage capacity of the company's products, and support the rapid release of subsequent products. Profit forecast and rating: We forecast that the company's net profit for the period 17-19 was 1.06/1.51/207 million yuan respectively, the EPS ratio was 0.75/1.06/1.46 yuan, and the PE corresponding to the current stock price was 69/49/36 times, respectively. Considering that the company is a leading manufacturer of hepatitis B drugs in China, the old products have maintained steady growth, it is expected that the first generic drug, tenofovir, will be approved within the year to bring greater flexibility in performance, and there is strong expansion expectations. The market capitalization is small, and there is room for growth, so a recommended rating is given. Risk warning: New product launch progress falls short of expectations; bid price reduction pressure continues