The performance was in line with expectations, and Shanghai Kaibao announced the 2016 interim report results: operating income of 885 million yuan, up 0.22% year on year; net profit attributable to parent company was 191 million yuan, up 1.10% year on year, corresponding to profit of 0.23 yuan per share. The performance is in line with our expectations. The development trend is that the main products resumed growth in the second quarter. The parent company's revenue for the first half of the year was 820 million yuan, up 1.83% year on year, of which revenue for the second quarter was 423 million, up 9.53% year on year (down 5.29% year on year in the first quarter), and growth resumed. Mainly, the company has increased market promotion of phlegm and fever-clearing injections, strengthened market coverage, and adopted incentives to achieve restorative growth, and is expected to maintain steady growth in the future. Epitaxial expansion complements quality resources. The company is actively expanding its product range. In January 2015, the company acquired the new national class 1.1 traditional Chinese medicine “Youxindin Capsule” for treating a wide variety of depression, acquired Xinyi Pharmaceutical and its two exclusive varieties “thiopronin sodium” and “Qishen capsule” in May, and increased capital in Shanghai Yizhong Biotechnology Co., Ltd. in December to enter oncology drug research and development and lay out the modern biomedical pharmaceutical field. It is expected that the company will continue to actively expand product coverage and enhance its overall competitiveness through extension in the future. The profit forecast kept the net profit unchanged. We raised the 2016 profit forecast from RMB 0.36 per share to RMB 0.37 per share. The main reason is that current repurchases have reduced share capital, which has led to an increase in earnings per share. Valuation and recommendations Currently, the company's stock price corresponds to 10.30 yuan. We maintained the recommended rating, but raised the target price by 4.17% to RMB 12.5, which is 21.36% higher than the current stock price. Corresponds to 2016 P/E 34 times. With the field of heat removal and detoxification as the core, the company continues to launch new dosage forms to meet market demand, and is expected to continue to further enrich the product line through external mergers and acquisitions. Price reduction pressure for risky traditional Chinese medicine injections; price increases for Chinese herbal medicines.