In 2018, the company's revenue increased 38.51% year on year, and net profit after deducting non-net profit increased 81.43% year on year. According to the 2018 annual report, in 2018, the company achieved revenue of 1,619 million yuan (+38.51%), net profit attributable to shareholders of listed companies of 374 million yuan (+57.98%), and net profit after deducting non-net profit of 376 million yuan (+81.43%). Looking at the quarterly performance, Q4 of 2018 achieved operating income of 597 million yuan (+38.57%) and net profit after deducting net profit of 155 million yuan (+35.74%). As of the end of the reporting period, the company had accounts receivable of 1,338 billion yuan, and net cash flow from operating activities decreased by 114 million yuan over the same period last year. The main reasons for the following reasons were: 1. The company is still in the market cultivation period. In order to quickly occupy the market and cover terminal channels, the company granted commercial customers a certain credit period, and commercial customers mainly used bank acceptance drafts. At the end of the reporting period, the company held bank acceptance drafts of 244 million yuan; 2. The company continued to increase market investment, and sales expenses increased year-on-year, superimposed on Chinese herbal medicines Operating cash outflows have continued to increase due to price fluctuations and raw material reserves; 3. The company has increased its R&D investment since 2016, with R&D investment of 61.24 million yuan in 2018. Increasing market expansion efforts, the “traditional Chinese medicine+fine Chinese medicine+health wine” triad went hand in hand. In 2018, the company's pharmaceutical industry revenue was 1,494 billion yuan (+37.14%), and gross margin was 83.95%; among them, the revenue of traditional Chinese medicine products was 1,281 billion yuan (+34.83%), gross margin was 83.20%; the revenue of premium Chinese medicine products was 213 million yuan (+52.93%), and gross margin was 88.49%. The main reason is that the company has continuously strengthened the integration of superior internal and external resources, increased strategic cooperation with leading regional businesses and top 100 chains, and increased its product market share and terminal sales rate. Health wine had revenue of 52.5558 million (+106.49%), gross profit margin of 68.73%, and gross margin increased by 6.93% over the same period last year, mainly because the company continued to develop market potential in key regions while increasing supply prices for new products. The sales expense ratio is well controlled. Continuously promoting core product process research and development, the company's sales expenses in 2018 were 629 million yuan (+21.85%), and the sales expenses rate was 38.83%. The company's sales expense ratio was well controlled, mainly due to an increase of 125 million yuan in marketing expenses and a decrease of 35 million yuan in advertising investment. While advancing the original R&D projects, the company added 12 new R&D projects, focusing on secondary development of core products such as Ding Kundan and Gui Ling Ji. At the same time, the company also established a joint laboratory with Shanghai University of Traditional Chinese Medicine and Xiamen University to carry out secondary development of famous and well-known recipes. The valuation and rating company continues to strengthen the integration of medical, commercial, and KA internal and external superior resources. Currently, it has covered nearly 150,000 chain stores nationwide, including nearly 40,000 management terminals. Considering that revenue for 2018 was slightly lower than previous expectations, we lowered net profit in 2019 and 2020 from 5.89 million and 775 million yuan to 599 million yuan and 669 million yuan, and EPS from 1.67 and 2.19 yuan to 1.44 and 1.90 yuan, maintaining the “buy” rating. Risk warning: 1. Accounts receivable continued to increase due to terminal sales falling short of expectations; 2. The multi-channel promotion model caused the company's sales expenses to be high; 3. The release of new production capacity fell short of expectations