Mid-term results in 2015 grew by 51.4%, slightly exceeding expectations: the company's sales revenue in the first half of 2015 was 489 million yuan, up 19.2% from a year earlier. Among them, the sales of specialist drugs increased by 35%. Profits attributable to shareholders increased by 51.4% to 153 million yuan. The profit growth mainly benefited from the rapid growth of the specialist pharmaceutical business with high gross margin. The API and antibiotic businesses are still losing money. In the face of many unfavorable factors in the industry, Dong Rui still maintains rapid growth, which reflects the strong competitiveness of the company.

Channel adjustment promotes an series of products: in the past year, the company has carried out sales rectification of Ann series, solving the problem of serial goods in different regions. Although the bidding situation is grim as a whole this year, the company's Ann series products have done a good job in price maintenance at the terminal by virtue of the brand advantages accumulated over the years, avoiding vicious competition. Most of the Ann series products are long-term drugs, and we expect steady growth in the future.

Winning the bid at a high price is conducive to maintaining rapid growth in the next two or three years: in this severe bidding process, the company won the bid at high prices in Zhejiang and Sichuan, mainly because the company has the experience of selling Lei Yi Dai overseas. as a result, the technical score is higher than that of other generic drugs. Zhejiang is the province with the largest sales volume of Entecavir, and the new bid will be implemented at the end of May, and we expect it to be good for the company's Leidi sales in the next two or three years. In addition, the company has been approved a new specification of entecavir this year, which is likely to bring additional growth in the future. Lei Yi de, which sells in partnership with GSK in Hong Kong, is expected to grow by more than 30 per cent over last year. The product is expected to maintain rapid growth in the future.

API and intermediate business is still in a state of loss, which has little impact on the company's overall business: due to the transformation of the new version of GMP in the company's plant last year, and this year's new machinery and production industry are in the process of running-in, so capacity utilization is still at a relatively low level. Antibiotic APIs were in the doldrums in the first half of this year, and the company's API business is still facing losses. The loss has been reduced, and the impact on the overall business has gradually decreased.

Adjust the target price to HK $7.86 and buy rating: we expect to record revenue of RMB 970 million, RMB 1.14 billion and RMB 1.34 billion respectively from 2015 to 2017, with a profit of RMB 300 million, RMB 380 million and RMB 473 million attributable to shareholders. Using the company's 2015 price-to-earnings ratio of 17 times earnings as a valuation reference, we adjust the target price to HK $7.86, which is 20.9% higher than the current price and maintains the buy rating.