Chuangmei Pharmaceutical ("the Company") is a pharmaceutical distributor operating in South China, mainly serving downstream customers related to the pharmaceutical retail market. According to China's Ministry of Commerce, Chuangmei ranked 37th in the country in terms of main business revenue in 2016, with a market share of about 0.2% in the national / Guangdong province.

Investment highlights include: 1) focus on business related to the pharmaceutical retail market, the company is expected not to be affected by the implementation of the two-vote system and will benefit from prescription outflow (prescription outflow will boost sales in the pharmaceutical retail market); 2) High-income annual compound growth rate (12.6%) from fiscal year 2016 to fiscal year 2019 is expected, mainly due to the active expansion of the distribution network, product portfolio and customer base. 3) Gross profit margin is expected to increase, this is mainly due to the increased contribution of businesses with higher gross margins to retail pharmacy sales and consulting services to revenue, the expansion of business size and the increase in the number of products of the company as a primary distributor; and 4) the dividend distribution ratio is expected to be higher in fiscal year 2017-2019.

Earnings per share are expected to grow from 0.2% to 0.549 / 0.651 / 0.767 in fiscal year 2017-2019, respectively. For the first time, it covers the investment rating given to "Collection" with a target price of HK $8.80, corresponding to a price-to-earnings ratio of 14.0 times for fiscal year 2017 and 11.8 times for fiscal year 2018.