Main points of investment

Recently, Fudan Zhangjiang released its annual report for 2016. during the reporting period, the operating income reached 622 million yuan, an increase of 7.3 percent over the same period last year, and the net profit attributed to the parent company was 139 million yuan, an increase of 8.6 percent over the same period last year. The realization of basic earnings per share is 0.15 yuan.

Ella's sales grew steadily, in line with expectations. Ella is one of the company's two core products, with sales revenue of about 260 million yuan in 2016, an increase of 12.9% over the same period last year and accounting for about 42% of the company's product sales. Ella's sales grew steadily in 2016, up about 21% from a year earlier. However, affected by a new round of bidding, Ella's sales price declined, affecting its full-year sales growth. As the bidding for Ella in some provinces has not yet been completed, we expect that there will still be downward pressure on Ella prices in 2017. However, as an exclusive breed, Ella's sales are expected to maintain steady growth in the future, and we expect Ella's sales to grow by 10% and 15% from 2017 to 2019.

Restricted by the sales model, the growth of Ribao has encountered bottlenecks. Li Baoduo's sales in 2016 were about 340 million yuan, up 3.8% from a year earlier and accounting for about 55% of the company's product sales revenue. The company adopts the distribution model for this variety, and Jiangsu Tailing Pharmaceutical has its exclusive agency. In 2016, with the promotion of the two-vote system and the implementation of "business reform and increase", both sales and prices of Lipido were hit. As one of the company's core products, we expect the company to actively adjust its sales strategy in the future, with sales growth of about 5% and 10% from 2017 to 2019.

Profit forecast: we expect Ella and Ribodo to maintain steady growth in the future, and the listing of Fumei will become a new growth point for the company. It is estimated that the company's operating income from 2017 to 2019 will be 7.21xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (PE).

Risk hint: Fumei's sales are not as expected; Libao's growth rate is at risk of further decline.