Key investment performance declined slightly: in 2015, the company achieved revenue of 1,465 billion yuan, a year-on-year decrease of 3.90%; net profit attributable to shareholders of listed companies was 177 million yuan, a year-on-year decrease of 9.91%. Among them, the pharmaceutical manufacturing business segment achieved revenue of 776 million yuan, a year-on-year decrease of 9.98%. The main reason was that dealers in the Guangdong market were optimistic about the company's anti-viral oral liquid and banyan root pellet market sales in the early stages, and some dealers had high inventory pressure in 2015, concentrating on removing inventory in the third and fourth quarters, which led to revenue of 411 million yuan and 562,185 million yuan, respectively, down 22.19% and 36.59% year on year. As of the first quarter of 2016, channel inventory for these two products has basically been processed, and sales are expected to improve in 2016. The orange red series products achieved revenue of 187 million yuan, an increase of 24.72% over the previous year, showing a good trend of sharp rise in volume and price. Strengthening the Chinese herbal medicine sector: In 2015, the company's Chinese herbal medicine business maintained steady growth, achieving revenue of 395 million yuan, an increase of 15.37% over the previous year. In March 2016, the company signed an “Equity Transfer Agreement” with Hubei Qingsong Yuyue Pharmaceutical Investment Co., Ltd., Hubei Tianji, Ji Qingsong, and Han Suying to acquire 55% of Hubei Tianji's shares held by Hubei Qingsong for RMB 358 million. Hubei Qingsong promised that Hubei Tianji's net profit after deduction from 2016 to 2018 will not be less than 47.5 million yuan, 52.25 million yuan, and 57.48 million yuan. Furthermore, the company signed a “Memorandum of Cooperation” with Anhui Dechang Pharmaceutical. The final implementation and implementation of the project will help the company further expand the Chinese medicine tablet market. Frontier technology strategic layout: Based on the existing TCR-T precision medicine R&D platform of the XlifeSC Life Science Research Center (xLifeSC), the company focuses on developing a new generation of new biological drugs to treat tumors, viral infections, and autoimmune diseases with internationally leading high-affinity TCR patents as the core technology, and cooperates with clinical units to carry out clinical research and application of third-class medical technologies such as specific T cells and TMHATAC (similar to CART). Together with Dr. Li Yi, the company established Xiangxue Life Science Co., Ltd. and Guangdong Xiangxue Precision Medicine Technology Co., Ltd. actively lays out precision medicine technologies such as genetic testing, gene sequencing, and cell therapy to build a modern biomedical research and development base and transformation platform. In 2015, the company completed the first phase of the specific T cell adaptive immunotherapy solid tumor project carried out in cooperation with 458 Hospital. The test results were ideal, and the second phase of clinical research work will be carried out; the company and Suzhou Shengnuo Biomedical Technology Co., Ltd. jointly developed a new small nucleic acid drug for injection completed pre-clinical research and entered the rapid review channel of the China Food and Drug Administration Evaluation Center. Profit forecast and investment rating: We predict that in 2016-2018, the company will achieve operating income of 2.04 billion yuan, 2.51 billion yuan and 3.04 billion yuan, respectively, and realized net profit attributable to shareholders of listed companies of 243 million yuan, 315 million yuan and 368 million yuan respectively, corresponding EPS of 0.37 yuan, 0.48 yuan and 0.56 yuan, respectively, and corresponding PE of 42.9 times, 33.1 times and 28.3 times, respectively. The main business performance of Xiangxue Pharmaceutical (300147) is stable, the marketing model is mature, and the establishment of a new company is expected to drive a new round of product sales growth; the entire industry chain of traditional Chinese medicine resources has been laid out, and it is expected to become one of the leading Chinese medicine drink companies through integration and upgrading; considering that the economic benefits of the TCR project are expected to gradually be reflected after obtaining clinical application qualifications, we maintain the company's “gain” rating. Risk warning: raw material price fluctuation risk, channel integration risk, policy risk.