Matters: The company announced the NMS Group's R&D pipeline situation. Currently, there are 9 types authorized for transfer or cooperation. Among them, Encorafenib has been approved by the FDA and entrectinib is being reviewed by the FDA; in addition, 13 new drug product lines have been established. In 2019, 3 are expected to enter the clinical stage. In addition to 4 new drugs currently being developed, 6 of the early potential candidates are expected to become first-in-class, and 3 are expected to become best-in-class. Ping An's view: NMS has outstanding R&D capabilities and has begun the Hong Kong stock listing process: NMS has more than 50 years of innovative drug research and development history. It has four major sectors: drug research and development, pre-clinical CRO, clinical research CRO, and customized drug development and survival services (CDMO), covering the entire chain of new drug development. Currently, NMS has more than 300 highly educated and experienced researchers, including 63 PhDs. The Group has more than 1,200 patents, published more than 310 articles, and 2,500 structured molecular banks, of which 80,000 have Nerviano's exclusive patents, and the cell bank holds 500 different human tumor cell lines. Currently, the company, Chairman Cao Yuping, and its affiliates hold 18.71% and 31.16% of the shares in Hefei Advanced Research and Oujin Biomedical Company respectively, and together hold about 44.88% of NMS's interests, surpassing other single shareholders. NMS has begun the Hong Kong stock listing process, and the company is expected to benefit significantly from the valuation premium brought by NMS after listing. Nine varieties have been authorized externally, and encorafenib and emtrutinib have great potential: Currently, NMS has authorized the transfer or cooperation of 9 varieties. Encorafenib was approved by the FDA on June 28, 2018 in combination with binimetinib to treat patients with unresectable or metastatic melanoma with BRAF V600E or BRAF V600K mutations. This combination therapy has twice the MPFS compared to vermofini and is well tolerated. Currently, NMS can obtain encorafenib's patent authorization payment and 2% sales commission after product launch. We conservatively expect that if encorafenib's annual sales after listing will reach more than 500 million US dollars, then NMS's annual sales commission revenue will reach 10 million US dollars; emtrutinib mainly targets tumors with NTRK1/2/3, ROS1, or ALK gene mutations, and is a new generation of broad-spectrum anticancer drugs. At least 19 types of pathological tumors respond to entritinib treatment. With good CNS activity, entrectinib is expected to surpass crizotinib as a first-line treatment for ROS1+NSCLC. We expect the global market for emtrutinib to be over $1 billion, NMS has retained a sales share of around 10%, and will bring in more than $100 million in revenue each year in the future. Subsequent research pipelines are abundant, and 3 varieties entered clinical trials in 2019: Currently, NMS has established 13 new drug product lines, covering major disease fields such as tumors and immuno-oncology. In 2019, 3 varieties are expected to enter domestic and international clinical stages, and more than 10 early-stage projects are progressing rapidly. The four new drugs under development, NMS-P088 (flt/CSF1r/Kit mutant inhibitor), NMS-P293 (selective PARP1 inhibitor), NMS-P338 (highly selective RET inhibitor), and NMS-P812 (PERK inhibitor), are in the pre-clinical development stage. In addition, NMS also has many potential early candidate varieties, 6 of which are expected to become first-in-class, and 3 are expected to become best-in-class. Profit forecasting and investment evaluation: The company's core products continue to be released rapidly, high-end generic drugs are expected to be launched one after another, and the Hong Kong listing process has begun after NMS delivery. Together, the company and the actual controller are the largest shareholders of NMS, and the company will benefit from the valuation premium of NMS after listing in Hong Kong. We maintain our previous forecast of 2018-2020 EPS of 0.75 yuan, 1.02 yuan, and 1.27 yuan, respectively. Corresponding to 2018 PE, it is only 30 times higher, maintaining the “recommended” rating. Risk warning: 1) Product sales fell short of expectations: The rapid increase in the company's early sales was due, on the one hand, to the company's own variety optimization and refined marketing promotion, and on the other hand, it coincided with the centralized development of the last round of provincial tenders. At the same time, competition for the core variety of torasemide was restricted. If the start of the new round of bidding in 2018 is delayed or competition products resume early or has an adverse impact on the company's sales; 2) R&D progress falls short of expectations: Currently, the company has several R&D projects in the registration process. Among them, it is expected that changchunxetine, esomeprazole, landilol, etc. will be approved in the near future, but drug reviews are affected by uncertain factors such as policies, and there is a possibility that implementation time may be delayed; 3) M&A integration falls short of expectations: Currently, NMS has successfully delivered, and the Chinese team has completed sorting out the product line. In the future, the varieties being developed by NMS require a large amount of R&D expenses, if good R&D costs cannot be obtained Solution, possible Influence integration and cooperation between companies and NMS.