Investment highlights:

The CFO resigned due to personal reasons. The company's CFO, Ms. Wu, resigned due to personal career development reasons. The company has appointed Ms Ho Yuyan as its new CFO. Ms. Ho has been working for the company for 15 years and is familiar with the company's finances. We have already communicated with Ms. Wu, who confirmed that the company's finances are very healthy, and investors don't need to worry about the company's operations and financial situation.

The fundamentals are worry-free, and the Ansan series and Raytheon continue to be the main growth points. Considering the annual growth of the Chinese antihypertensive drug market by more than 20%, the huge number of hypertensive people (330 million), low medication intake rates (< 40%), more coverage of retail pharmacies, community and private hospitals, and the faster growth of the new generation of antihypertensive drugs Anneixi and Ammepin, we expect the Ansan series to maintain growth of around 20% in 2014. Considering the huge number of people with hepatitis B in China (140 million), due to its low drug resistance replacing the older generation of anti-hepatitis B drugs and its gradual entry into major drug-consuming provinces and overseas markets such as Jiangsu, Guangdong, and Zhejiang, we expect Raytech to maintain growth of more than 30% in 2014.

The valuation was attractive and kept buying. We maintain our 2014-16 EPS forecast of RMB 0.26/0.33/0.42 (year-on-year increases of 36%/28%/25%, respectively). Currently, the stock price only corresponds to 18 times the 14-year price-earnings ratio, the PEG is only 0.7 times, while the industry average is 24 times. The valuation is very attractive. The target price of HK$7.5 corresponds to a 30% increase, maintaining buying.