Event: the company released its 2012 annual report on April 9, 2013. the company achieved revenue of 363 million in 2012, an increase of 5.8% over the same period last year, and a net profit of 138 million of shareholders belonging to listed companies, an increase of 90.76% over the same period last year. EPS is 0.62, slightly lower than we expected, mainly due to the company's price adjustment of health-preserving goods slowed down in the third quarter and increased losses in western medicine.

The company's profit distribution plan for 2013 is to pay a cash dividend of 2 yuan (including tax) for every 10 shares. Bid farewell to the gloomy history and set sail again: in March 2013, the company received a punishment decision issued by the China Securities Regulatory Commission for violations committed before 2009, marking the company's formal bid farewell to a dishonorable history. Since the change of leadership in 2009, the company has firmly focused on the development strategy of traditional Chinese medicine with "Guhan Health Preservation" as the core, focusing on solving the problems left over by the company's history, gradually stripping off non-core assets, and strengthening internal management control. the company is back on the road of growth, with a loss of 88 million in 2009 and a net profit of 137 million in 2012, the company ushered in a new start. In the future, the company will focus on strengthening the promotion of health care inside and outside the province, which is worth looking forward to. In 2012, the company focused on improving the profit margin of health care channels, and the revenue growth rate slowed down: the company expects to achieve revenue of 260 million in 2012, an increase of 5% over the same period last year. The main reason is that the company controlled and adjusted the price of 30 pieces of health essence in the third quarter. after the unified delivery in October, it widened the difference between the terminal price and the ex-factory price, enhanced the channel profit and enhanced the enthusiasm of the channel and terminal. In December, we found through the drugstore survey that the current price system of 30 health essence is healthy, indicating that the company has successfully solved the price upside down of 30 health essence, and the channel profit has been effectively guaranteed.

This year, the company's sales focus is still to drive the provincial market sales, and gradually adjust the price system of 12 health care essence. For non-provincial markets, the company is more cautious, is still in the early promotion period. We conservatively estimate that the income growth rate of health care will return to about 15% in 2013. The increase of major shareholders shows confidence: the company announced in December 2012 that the Ziguang Group or the Ziguang Group planned to increase its holdings in the next 12 months, with a cumulative increase of not less than 1 million shares and a maximum of 5 million shares. Considering that after the disposal of Nanyue Pharmaceutical Factory, the company is working hard to promote the return of the value of Guhan health essence and its promotion inside and outside the province, and Guhan health essence has the potential to become a big health care brand. The increase of controlling shareholders shows that they are optimistic about the prospects of Guhan's health preservation, and it also strengthens our confidence in the development of the company in the next 2-3 years. Profit forecast: we adjust the company's EPS from 2013 to 2015 to 0.24,0.32 and 0.41 respectively, taking into account the regional brand value of health essence and the market space inside and outside the province to maintain the company's "overweight" rating.

Risk hint: the promotion of health essence is not as good as expected.