Incident: On May 23, 2017, the company issued an announcement: The CFDA updated the drug approval number for the tenofovir dipyrifuroxil fumarate capsules declared by the company to be produced, as “Chinese medicine standard H20170005”, and the processing status is “under approval”. (Note: We speculate that the current processing status is still “under approval” because the CFDA and CDE departments did not synchronize in a timely manner. The company's tenofovir ester has obtained an approval number, that is, the product has obtained production approval from the CFDA). The core idea was replicated for the first time in China, and tenofovir as an indication for hepatitis B was approved. Tenofovir ester is the company's major variety. It has outstanding effects in treating hepatitis B. Overall, it is currently the best clinical choice. In 2014, the global market for tenofovir ester and its compounds reached $10.68 billion. In June of last year, price negotiations organized by the Health Planning Commission reduced the monthly cost of tenofovir treatment from 1,470 yuan/month to 490 yuan/month; in February of this year, tenofovir was included in the National Health Insurance Category B catalogue, all of which greatly reduced the pressure on patients to pay. We believe that tenofovir ester is expected to be rapidly released in the future, and that the company, as the first model of tenofovir ester for hepatitis B, will benefit greatly. As the first model enterprise, the company will quickly enter all provincial markets through supplementary bidding and other means, forming important support for the company's performance in the second half of the year. The position of the industry has been further strengthened, and other varieties are expected to benefit again. The approval of tenofovir ester not only enabled the company to add a major variety, but also further strengthened the company's position in the field of hepatitis B treatment, making it the only domestic enterprise that has two major first-line drugs against hepatitis B virus, tenofovir and entecavir. This means that the company has more voice in product sales, which is expected to further benefit the company's other varieties of liver disease and further increase sales volume. In the future, leading liver disease companies are firmly optimistic about the long-term value of the company. The company is committed to further expansion in the field of liver disease and continuously consolidating its position in the industry. Currently, the company has stocked 2 new drugs for hepatitis B, 1 new drug for fatty liver disease, and 1 new drug against liver cancer, with huge potential in the future. We believe that the company is expected to become a leading enterprise in the field of liver disease, and we are firmly optimistic about the long-term value of the company. Financial forecasting and investment recommendations We maintain our forecast of the company's earnings per share for 17-19 at 0.68, 1.08, and 1.60 yuan, maintain the company's valuation of 51 times that of 2018, and maintain the company's valuation of 51 times that of 2018. The corresponding target price is 55.08 yuan, giving it a buying rating. Risk warning If tenofovir's supplementary bid progress in various provinces falls short of expectations, it may affect the company's performance in the second half of the year