Investment Overview In the Chinese market, Telink Pharmaceuticals specializes in business such as 1) vaccine promotion and sales, 2) drug promotion and sales, 3) vaccine supply chain, and 4) pharmaceutical supply chain, and 5) pharmaceutical manufacturing and sales. With a nationwide promotion and distribution network, Telink Pharmaceutical has become the leading third-party Class II vaccine promoter and vaccine distributor in the country, and the second largest drug promoter in the country. We expect Telink Pharmaceuticals to record earnings per share of HK$0.223 and HK$0.286 respectively in 2011 and 2012, respectively, increasing by 18.6% and 28.3% year-on-year. Since there is a considerable difference in the nature of Telin Pharmaceuticals' pharmaceutical promotion business and pharmaceutical supply chain business, we estimate the reasonable valuation of Telink Pharmaceuticals using a pricing method that combines price-earnings ratios. We agree that the valuation of the group's pharmaceutical promotion business should be similar to Kangzhe Pharmaceutical (867 HK), while the valuation of the pharmaceutical supply chain business should be at a 30% discount compared to China Pharmaceutical Holdings (1099 HK). Based on the above estimates, we have determined that the reasonable valuation of Telink Pharmaceuticals should be 24 times the 2011 price-earnings ratio. Converted to the 2011 estimated profit per share of HK$0.223, the reasonable stock price is HK$5.4, which although 18.0% higher than the minimum offering price of HK$4.54, is still below the maximum issue price of HK$6.0, so it is still below the issuance price limit of HK$6.0, so it is rated neutral.