Matters: (1) Li's Pharmaceutical Co., Ltd. announced on January 26: The needleless transdermal injection administration system for lidocaine hydrochloride powder used as an amide topical anesthetic on the surface of the skin (trade name: Zingo) by Pule Pharmaceutical, a subsidiary of the company, officially received clinical approval from China's Food and Drug Administration in December 2017. The drug has been approved for production by the FDA and approved and issued a product registration certificate by the Hong Kong Department of Health. (2) Lee's Pharmaceutical Co., Ltd. announced on January 29: In December 2017, the company successfully reached an agreement with the Irish company Noden Pharma DAC (Noden) to obtain exclusive distribution and sales rights for the world's only marketed renin inhibitor drug, aliskiren tablets (trade name: Reesli) in mainland China, Hong Kong, Macau and Taiwan. The indication is for the treatment of primary hypertension. (3) Li's Pharmaceutical Co., Ltd. announced on January 29: The recombinant total anti-PD-L1 monoclonal antibody injection (ZKAB001) of China Oncology Co., Ltd. (COF), a subsidiary of the company, was officially approved for clinical approval by China Food and Drug Administration on January 18, 2018. Guoxin's view: Lee's Pharmaceutical Company is an excellent biopharmaceutical enterprise with an international perspective, guided by innovation and research and development, Lee's Pharmaceutical Company is an excellent biopharmaceutical enterprise guided by innovation and research and development. It has been operating in the Chinese pharmaceutical industry for more than 20 years, and has established a solid and expanding drug research and development, pharmaceutical manufacturing and hospital prescription drug sales team and system in China. At the same time, the company has established extensive cooperative relationships with about 30 international companies, and has taken a high position among Chinese pharmaceutical companies with an international perspective. Currently, there are more than ten types of products sold in the Chinese market, including well-known brands such as “Keyineng,” “Limaiqing,” and “Fippley.” Lee's Pharmaceutical Company has more than 50 products under development covering six major fields, including cardiovascular, oncology, ophthalmology, dermatology, obstetrics and gynecology, and nephrology. In the medium to long term, the company has room for steady and sustainable growth. 2018 ushered in an inflection point in performance. As the major product lines under development enter a harvest period, the company is expected to take off for the second time in the in-depth report “Lee's Pharmaceutical Factory (0950.HK): Expanding China's biomedical industry with global resources, facing inflection points and revaluation (2017-12-15)” published by Guoxin Securities in December 2017, judging: 2007-2014 was the company's first round of rapid growth. After a consolidated investment period in 2015-2017, 2018 will be a turning point for the company - the original products will resume growth, and at the same time The results of the products under development, which were vigorously laid out and invested in the early stages, have been frequent, and the company will enter a new period of growth. This series of announcements of R&D results is a preliminary verification of our judgment. It is expected that in the future, more R&D projects will achieve phased results one after another and will be announced. Maintaining Guoxin Pharmaceutical's research judgment: If innovative global products such as the anti-liver cancer oncolytic drug Pexa-Vec, PD-L1, and the needleless analgesic system Zingo are approved for listing, the company will take off for the second time, and market value is expected to gain huge room for improvement. The needleless analgesic system Zingo and PD-L1 monoclonal antibody drugs have received clinical approval one after another. The R&D strength and layout will become a strong driving force in the future. The company reserves more than 50 drugs under development in six major fields, including cardiovascular, oncology, and ophthalmology, and lays out research and development of pediatric drugs and rare diseases. The products under development will be launched one after another after 2018. Among them, Zingo has received clinical approval from the CFDA as the first needle-free, painless powder injection system approved by the FDA. Its needleless drug delivery method will greatly reduce the drug's effective time and significantly improve the pain experience of children. Approval policies are favoured, and it is expected that the launch will be accelerated to fill the gap in the Children's Bureau's narcotics market. The PD-L1 antibody drug has also received clinical approval. Unlike competitors, the company has oncolytic immunopharmaceuticals with leading research and development progress in the world and intends to create a combination solution for PD-L1 and Pexa-Vec oncolytic virus. This combination scheme has been shown to have significant curative effects in animal models, and Amjin, the world's first oncolytic immune drug manufacturer T-vec, is also studying the combination of the two types of drugs. Investment suggestions: product line expansion+new clinical progress of innovative drugs, enhanced growth certainty, higher target valuation expectations, maintaining “buy” investment ratings and maintaining profit expectations: 2017-2019 revenue of HK$10.28/11.76/1,357 billion, growth rate of 10.5/14.4/ 15.4%, net profit of HK$2.45/282/3.3 billion, growth rate of -2.8/15/ 17.2%, corresponding EPS is HK$0.48/0.56. Based on our further analysis of some of the new products introduced and under development by the company, considering the reversal of performance and growth acceleration in the next 3 years, the results of products under development or market expectations, especially the clinical promotion of innovative drugs such as oncolytic immunopharmaceuticals and immune checkpoint inhibitors, the company's performance growth certainty and market capitalization space expectations will increase significantly. Referring to the valuation of Hong Kong H-share innovative pharmaceutical companies, 25-28 times PE for 2019 (the performance of new products to be listed in 2018 and 2019 has not yet been reflected in profit forecasts), the reasonable valuation for the next year was raised to HK$14.0-15.7 (previous target valuation was HK$10.9-11.9), maintaining a “buy” investment rating compared to the current stock price of HK$9.62 or with a profit margin of 45-63%.