The Ann series continues to be the main growth point. The antihypertensive drug series is the main profit contributor (~ 55% in 2103) and the growth point (sales increased by 28% in 2013). In addition to increasing the coverage of retail drugstores and community hospitals in 2014, the company plans to enter private hospitals. Considering the strong support of the government to private hospitals and the rapid growth of private hospitals (17.2% compound growth in 2005-12, while only 3.1% compound growth in all hospitals), we believe that private hospitals are expected to become a new growth point in the Ann series. Considering the 20 per cent annual growth of China's antihypertensive drug market, the huge number of people with high blood pressure (330 million), the low medication rate (< 40 per cent), more coverage for retail pharmacies, communities and private hospitals, and the faster growth of the new generation of antihypertensive drugs Annexi and Anmeppin, we expect the Ann series to maintain growth of more than 20 per cent in 2014.

Lei Yi de continues to be the main growth point. The anti-hepatitis B drug Leidi is another major profit contributor (~ 40% in 2013) and a growth point (sales increased by 43% in 2013). Considering the huge population of hepatitis B in China (140 million), due to the replacement of the older generation of anti-hepatitis B drugs with low drug resistance and the gradual entry into major drug consumption provinces such as Jiangsu, Guangdong and Zhejiang, we expect Lei Yi to maintain a growth rate of more than 30 per cent in 2014. In addition, the company is actively exploring overseas markets such as Hong Kong and Southeast Asia, and is expected to become a new growth point in the future. The company has submitted an application for bidding for drugs in Hong Kong. We estimate that the company is expected to win the bid because of the huge influence of its dealer Glaxo in the Hong Kong market. It is expected to contribute ~ 25 million of sales and ~ 15 million of profits each year (accounting for 9.8% of profits in 2103).

A strong drug pipeline ensures continued growth. At present, there are 36 drugs in the drug pipeline. Among them, we expect two hypertension drugs, one anti-dementia drug and one lipid-lowering drug to be approved in 2014, which will further expand the company's cardio-cerebrovascular drug product line and growth rate. Considering the company's strong market position in the cardiovascular and cerebrovascular drug market, we believe that the company's continued R & D investment (4% of sales in 2013) and strong drug pipelines will help maintain the company's rapid growth in cardiovascular drugs.

Valuations are attractive and keep buying. We maintain the 2014-16 EPS forecast of RMB 0.26, 0.32, 0.39 (an increase of 34%, 24%, 24%, respectively over the same period last year). Our target price of HK $7.2 is 32% higher than the current share price. Although the share price has risen 114% since our recommendation, the share price now corresponds to only 17 times 14-year price-to-earnings ratio, PEG is only 0.7 times, while the industry average is 23 times, and the valuation is very attractive. Keep buying.