The incident company announced its 2017 quarterly report, achieving total operating income of 82.686 million yuan, an increase of 1.37% over the same period last year; net profit attributable to shareholders of listed companies of 203.994 million yuan, a decrease of 27.66% over the same period last year; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 20,714,600 yuan, down 25.48% from the same period last year. The review of entecavir has become the mainstream drug for chronic hepatitis B, driving significant adjustments in the company's revenue structure: argandine (adefovir ester) and hegandine (lamivudine) are in a state of decline in volume and price due to drug resistance issues and the cost performance ratio of entecavir after the price reduction; the company's entecavir revenue accounted for only 47.3% in 2014, and 1Q2017 rose to 73.2%. The price reduction for entecavir began in 2Q16, and sales growth in 1Q17 is expected to be close to 30%: entecavir's 1Q16 revenue growth rate is 43.2%, matching the growth rate of 41.6% in 2016. With the gradual implementation of new standards in various regions, the 4Q16 revenue growth rate is only 21.2%, so the impression of the price reduction is about 20%. According to estimates that the 1Q17 revenue growth rate of 10.6% and the 1Q16 price reduction factors were less affected, the 1Q17 sales growth rate was still 30%. The company's sales capacity continues to improve, and the share of direct sales has further increased to 58.43%: with the construction of the company's direct sales team and the adjustment of the sales model under the two-vote system, the share of direct sales has further increased; direct sales mainly come from the contribution of entecavir. In the future, tenofovir and entecavir channels complement each other, providing a guarantee for volume expansion. New drug R&D expenditure continues to increase, dragging down performance in the short term, but helping maintain the company's leading position in the field of liver disease in the long term: 1Q17, the company invested nearly 40 million yuan in new drugs in 2016, GST-HG131 (hepatitis B) current expenditure of 6 million (total investment of 24 million); current expenditure for GST-HG141 (hepatitis B) and GST-HG151 (non-alcoholic steatohepatitis) of 6 million (total investment of 24 million); GST-HG131 (hepatitis B) current expenditure of 18 million (total investment) Investment of 24 million); current expenditure of 10 million for GST-HG161 (liver cancer) (total investment of 25.5 million). We expect that the company's R&D expenditure will remain above 15% of revenue in the next few years, which will have a significant impact on performance. The profit adjustment is based on continued excess investment in R&D over the next few years and the approval of tenofovir, which is expected to gradually increase the endogenous growth rate. We expect net profit for 2017/2018/2019 to be 0.86/120/174 million, corresponding growth rate of 29.37%/39.78%/44.95%. The current stock price corresponds to 77 times P/E in '17. Investment recommendations: 1) The market for chronic hepatitis B is huge, and tenofovir will be the mainstream drug in China for the next 5 years; 2) Guangshengtang tenofovir completed on-site testing on April 10, 2017, and is expected to be approved for the first HBV indication; 3) The company's direct sales team continues to expand, which can support the release of entecavir and tenofovir. The company actively cooperates with the national control system to ensure the stability of supply. On the other hand, it has expanded the OTC market and long-tail medical terminals; 4) The company is actively deploying innovative drugs in the field of liver disease, which is expected to become the field of liver disease A green enterprise with Long-term investment value. The company is looking for extension opportunities: we are concerned that in the 2016 management expenses disclosed in the annual report, “due diligence was carried out on a number of proposed mergers and acquisitions projects, and intermediary consulting fees increased by 3.5 million yuan”; at the same time, the company plans to jointly establish the “Fujian ****fang Pharmaceutical Innovation Research and Development Center (Limited Partnership)” with a total pledge amount of RMB 200 million, which will mainly focus on pharmaceutical and medical device projects. Based on tenofovir HBV indications, the first model is highly flexible about future performance and maintains an increase in ownership rating. Risks indicate product price pressure, uncertain launch time of new products, low expectations of new product sales growth, etc.