Investment highlights:

Changing the CEO won't change the company's strategy. The company announced the resignation of the current CEO, Mr. Gao Yi, due to health reasons, effective 2014/3/9. The company announced that it has appointed Ms. Huang Dongmei as the new CEO. Ms. Huang has been with Dongrui for nearly 10 years and has held a number of senior management positions. Ms. Huang has 20 years of experience in the pharmaceutical manufacturing industry and is good at planning and managing pharmaceutical product sales, marketing and business development. Ms. Wong currently holds about 1.66 million stock options. We believe that Ms. Huang has sufficient management experience and motivation to manage Dongrui well. We also believe that changing the CEO will not change the company's current strategy of focusing on specialty medications, which have been the company's growth and profit points over the past few years.

The valuation is very attractive, a repeat purchase. We maintain the 2013-15 EPS forecast target prices of RMB 0.20/0.26/0.32 (year-on-year increase of 39.3%/29.1%/24.1%, respectively) and HK$7.2, with room for a 27% increase from the current stock price. Although the stock price has risen 122% since we recommended it, the current stock price only corresponds to 17.4 times the 14-year price-earnings ratio, and the PEG is only 0.8 times. The valuation is very attractive. We think the value of the stock is seriously underestimated, so I repeat the purchase.