Incident: On May 22, the CFDA website updated the approval status of Guangshengtang tenofovir fumarate dipyrifuroxil capsules. The drug was approved with the drug number H20170005, which means that the first generic tenofovir drug in China for the treatment of hepatitis B has been approved. Comment: Tenofovir ester is a novel first-line anti-hepatitis B drug, and there is plenty of room for replacement in the future. Tenofovir is an oral nucleoside antiviral drug developed by Gilead. It was marketed in the US for the treatment of AIDS in 2001, approved by the FDA for treatment of hepatitis B in 2008, and sales reached US$1,186 billion in 2016. Currently, tenofovir ester and entecavir are the same first-line drugs for hepatitis B virus, but the former has a lower drug resistance mutation rate and can be used as the drug of choice for follow-up treatment for drug-resistant hepatitis B patients. Pregnant patients can also use it safely, and the scope of clinical application is more extensive. Therefore, we believe that after the launch of domestically produced tenofovir ester, it is expected to replace the market share of old products such as lamivudine, adefovir ester, and even entecavir with the above clinical advantages, and there is huge potential for the future. Due to the combination of multiple favorable factors, the subsequent release of tenofovir ester is expected to accelerate. The original research drug Veride was marketed domestically as early as 2008 to treat AIDS, and was then approved in December 2013 for hepatitis B indications. Sales in 2015 were only about 100 million yuan. The main reason is that monthly treatment costs of up to 1,500 yuan/month are expensive and not covered by medical insurance, making it unbearable for patients who need to take medication for a long time. However, on May 20, 2016, the Health Planning Commission announced the results of the first batch of national drug price negotiations. Tenofovir was reduced by 54%, and the monthly treatment cost fell to 490 yuan from the previous 1,500 yuan, which is close to that of Zhengda Tianqing's Runzhong (the first domestic entecavir generic drug) and even about 40% lower than the cost of squibboludine (the original research drug for entecavir). On the basis of a sharp price reduction, it was also included in the new medical insurance catalogue in February this year, greatly enhancing the accessibility and affordability of the drug, providing an advantage for the rapid release of the company's products after launch Support. The proportion of direct sales continues to increase, and sales channels are constantly being improved. In order to cope with the two-ticket system and improve terminal control, the company continuously increased the direct sales ratio in the first quarter. The direct sales ratio increased to 58.43% in the first quarter. In addition, the company signed a strategic cooperation agreement with Sinopharm Holdings at the beginning of the year to achieve double integration of products and channel resources, enhance the terminal coverage capacity of the company's products, and support the rapid launch of nofovir in the future. Investment suggestions: We expect the company's net profit from 2017 to 2019 to be 91 million yuan, 148 million yuan, and 202 million yuan respectively, corresponding to the PE of the current stock price, 69/43/31 times, respectively. Considering that the company is a leading hepatitis B drug company in China, entecavir has maintained steady growth. Tenofovir, the first generic drug, is expected to be marketed within the year to bring greater performance flexibility, and there is strong expansion expectations. The small market capitalization has room for growth, giving it a buy-A rating. Risk warning: New product launch progress falls short of expectations; bid price reduction pressure continues