Report Summary: Incident: On February 16, Baihuacun announced a restructuring plan: the original less profitable business was used to replace the equivalent portion of the assets to be purchased (at a price of 255 million yuan) and 100% of the assets to be purchased (at a price of 1,945 million yuan). The difference was paid by the company to issue a non-public offering of about 100 million shares per share and 456 million yuan in cash. The assets to be sold in this transaction include 66.08% of Hongji Coking Co., Ltd., 51% of Yuxin Coal's shares, 100% of natural products, and claims on the 101 coal mine. Transform into the CRO industry and enjoy the benefits of high growth in the industry. Currently, the CRO industry is growing at an overall rate of more than 30%. Warwick Pharmaceuticals, which replaced the target, is a leading domestic pre-clinical CRO company, and has completed nearly 200 pre-clinical studies since its establishment. As of 2015, the company has 203 research projects, of which 85 have received clinical acceptance notices, which are expected to be completed within 2-3 years, generating at least 600 million yuan in revenue. At the same time, the company was also the company with the highest number of new drug declarations in 2015. Warwick Pharmaceuticals's gross profit margin (about 88%) is superior to the industry average (about 60%). A-share CRO company Tiger Pharmaceuticals has a price-earnings ratio of 85.6 billion yuan; Broggy Pharmaceuticals has a price-earnings ratio of 156 billion yuan; Warwick Pharmaceuticals promised net profit of 100 million yuan in 2016 and an acquisition price of 1,945 billion yuan. There is plenty of room for growth in terms of valuation and total market value. Warwick Pharmaceuticals made a performance commitment: the net profit of the deducted parent company from 2016 to 2018 was not less than 100 million yuan, 123 million yuan, and 147 million yuan respectively. At the same time, the cumulative net profit for the above three years was not less than 370 million yuan. Performance is linked to share unlocking, and the equity incentive effect is strong. Driven by strategic capital, expectations for extended mergers and acquisitions of the company are strong. At the end of last year, the company introduced strategic investors in pharmaceutical investment, Liyi Investment and Ruidong Capital. They will continue to recommend global mergers and acquisitions targets for listed companies and participate in management, assist listed companies to integrate merger and acquisition resources, and help listed companies carry out mixed ownership reforms. There is a possibility that assets owned by Liyi Investment and Ruidong Capital will be injected in the future. Maintain the company's “gain” rating. The company's net profit attributable to shareholders of listed companies in 2016, 2017 and 2018 is estimated to be 100.14 million yuan, 123.9 million yuan, and 1501.2 million yuan, respectively, and EPS of 0.29 yuan, 0.35 yuan and 0.43 yuan respectively. The current stock price is 53 times the 2016 PE. Risk warning: The impact of chemical classification registration reform on products under development, R&D progress falling short of expectations, etc.