Incident: The company released its 2015 annual report. In 2015, the company achieved operating income of 1.46 billion yuan and net profit attributable to shareholders of listed companies of 180 million yuan. The year-on-year growth rates were -3.9% and -9.9%, respectively. Sales of core products fell short of expectations, and the new sales model is full of expectations. The overall growth rate of the pharmaceutical economy declined significantly in 2015. The output value of the pharmaceutical industry is expected to increase by about 12% in 2015, down 4 percentage points from the increase in 2014. In 2015, the company achieved revenue of 1.46 billion yuan and net profit attributable to shareholders of listed companies of 180 million yuan. The year-on-year growth rates were -3.9% and -9.9%, respectively. The main reason why the company's revenue and performance fell short of expectations was due to factors such as increased competition in OTC channels, which led to a certain decline in sales of the company's core varieties of antiviral oral liquid and panula root granules. Revenue fell 22.19% and 36.59% year on year, respectively, and gross margins fell 2% and 5.8% respectively, dragging down the company's overall performance. The orange red series of products still maintained a double-digit growth rate, reaching 25%, mainly benefiting from the increase in bid prices in hospitals in Guangdong. After the overall reform of the company's sales system, sales evolved from a traditional agency model to a direct sales model. The traditional core products are expected to rise strongly, and rapid growth can be achieved in the future. The results of the epitaxial expansion of the Chinese medicine tablet business have been obvious, and the ability to control source tablet resources has been continuously strengthened. In 2015, the company's Chinese herbal medicine business maintained steady growth, achieving operating revenue of 400 million yuan, a year-on-year increase of 15.4%, and gross margin increased 1.9% year-on-year. The increase was mainly due to the acquisition of Bozhou Huqiao Pharmaceutical and the continuous integration of channels by Huqiao Pharmaceutical. The company will use Chinese medicine tablets as its main business for a long time in the future, which is the core of the company's epitaxial acquisitions. The company will soon invest 360 million yuan to acquire 55% of Hubei Tianji Chinese Medicine Tablets Co., Ltd., further consolidating the company's advantages in the field of Chinese medicine tablets, and contributing no less than 25 million to the company's annual performance. As the country's control over the source quality of tablets has become more strict in recent years, the integration of source resources provides raw material guarantees for the company to consolidate its main business, and also provides sufficient resource reserves for the future layout of the Chinese medicine formula granule market. The company will continue to stick to traditional Chinese medicine as its main business, and will further integrate resources upstream in the future. Overseas expansion and new drug development have been very rewarding. In 2015, the company's antiviral oral solution obtained a natural health product certificate issued by Health Canada and approved for sale in the Canadian market, which was an important breakthrough for the company to expand overseas markets. The company's precision medicine platform is being actively promoted. The specific T cell adjuvant immunotherapy program for solid tumors carried out by the company in cooperation with 458 Hospital has completed phase I clinical trials, and the test results are ideal. At the same time, the company is actively promoting research on TCR-T cell therapy. TCR-T technology has bright prospects for future development and is a major complement to future new anti-tumor technology. The company's TCR-T technology is in line with the international community and is the company's strategic layout in the field of precision medicine. It is expected that precision medicine platforms will be selectively commercialized in the second half of this year. Performance prediction and valuation: Due to the advanced technology of the precision medicine platform layout of the company, without considering its future profit situation, the company's EPS is expected to be 0.36, 0.44, and 0.56 yuan respectively in 2016-2018, corresponding PE is 44, 36, and 28 times, respectively. Considering the future commercialization of the company's precision medicine platform and the liberalization of the traditional Chinese medicine formula granule policy benefits to the company, the “buy” rating is maintained. Risk warning: There are risks such as the curative effect of TCR-T technology falling short of expectations and OTC promotion falling short of expectations.