Key investment events: Recently, the company announced the 2018 semi-annual report. 2018H1 revenue was 647 million yuan, up 35.06% year on year, net profit from the mother was 210 million yuan, up 30.93% year on year, and net profit from non-return mother was 198 million yuan, up 26.62% year on year. 2018Q2 had revenue of 378 million yuan, up 38.58% year on year, net profit of 112 million yuan, increase of 36.41% year on year, net profit after deduction of 108 million yuan, increase of 36.91% year on year. The improvement was significant from quarter to quarter, and the performance was in line with expectations. API customer peptides are improving overall, and future releases can be expected. API revenue was 74.36 million yuan (-22.61%), and the increase in new orders contributed to rapid growth in peptide customer customers (93.98 million yuan, +374%). We believe that the expansion of new API customer peptide customers had a slight impact on the growth of accounts receivable. As the patent challenge for tivaliraglutide progresses and the 2022 patent period approaches, the company's liralutide APIs are expected to achieve the release of specialty APIs after solving the current production capacity problem (the landing of a biomedical production base in Wuhan), which greatly increases the company's profit level. Furthermore, the company's atoshiban API sales in the European market are stable. The pharmaceutical business has grown significantly, and products that are deeply involved in the peptide field are highly competitive. The revenue of pharmaceutical products was 342 million yuan, up 66.23% year on year. On the one hand, due to the impact of the two-vote system from low to high opening (sales expenses increased 117.27% year on year), on the other hand, the company's core varieties of teripressin (+21%) and growth retardant (+59%) increased significantly, and small varieties such as carbocin and etiopatide were gradually released, which is expected to provide greater flexibility in the company's pharmaceutical business performance in the future. Committed to new product research and development, the company is developing a rich product line. The company invested 40.27 million yuan in R&D in 2018 H1 (+29.42%). The company's flagship product, liraglutide injection, has begun clinical trials, and the company will submit an ANDA application for glatiramer acetate injections as soon as possible to compete in the $3.8 billion market. Currently, only two companies, Sandoz and Mylan, have approved generic drugs for the market. The new thymus method has received production approval. The company continues to carry out the consistency evaluation of injectable products, and the injectable consistency evaluation ushered in an opportunity to overtake traffic at a corner. Through the acquisition of AMW in the first half of this year, the company will further explore new peptide drug delivery technology and improve drug efficiency, which is expected to further enhance the competitiveness of the company's products. Profit forecast and investment rating: We expect Hanyu Pharmaceutical's operating revenue for 2018-2020 to be 1,562 billion, 1,994 billion and 2,531 billion yuan respectively, net profit attributable to the parent company of 485 million, 736 million and 958 million yuan, and EPS of 0.52 yuan, 0.79 yuan and 1.03 yuan respectively. The company is deeply involved in the field of peptides. We believe that the varieties benefiting from the medical insurance catalogue are expected to usher in volume growth. At the same time, the continued growth in demand for overseas APIs will drive the company's export business. As a result, we maintain a “buy” rating for the company. Risk warning: Domestic pharmaceutical tenders are under pressure to reduce prices. The bidding progress falls short of expectations, API exports fall short of expectations, and the progress of generic drug applications falls short of expectations, leading to a risk of impairment of goodwill.