Key investment points Core highlights: 1) Tadalah has more room for imagination, and its performance may exceed expectations; 2) Core products such as nanocarbon tracers and esomeprazole enteric capsules have entered a stage of rapid growth; 3) Hunan Kangyuan's profit or reversal. Tadalafil (Xin Wei Ge) is a major variety newly distributed by the company, and the release rate may have exceeded expectations. The drug was originally developed by Lilly and indicated for erectile dysfunction (ED). It was marketed in China as early as 2005. In 2019, Changchun Haiyue completed its first domestic model, and it also granted sales agency rights in China to Laimei. In 2017, the global market sales of tadalafil were approximately $3.9 billion, with a year-on-year growth rate of about 7.6%. According to a comparison of relevant data, tadalafil has the advantage of being active for a long time and is not subject to alcohol or dietary restrictions. The share of tadalafil in the global market is about 55%, which is about 15 percentage points higher than sildenafil. In 2017, domestic tadalafil sales were about 700 million yuan, accounting for about 20% of the market, which is more than double that of sildenafil. We think it is mainly due to domestic imitation products not being marketed, making marketing intensity lower than sildenafil. Referring to the historical case of Baiyunshan Jingo, it sold about 2.9 million tablets during the year after listing in October 2014, and sold more than 47 million tablets in 2018. It can be seen that there is huge market space in this field. According to Xinweige's overall progress estimates, we expect retail sales to begin in April without being affected by volume procurement. It is conservatively estimated that tadalafil's revenue increase in 2019 may exceed 200 million yuan. If it cooperates with new retail platforms such as e-commerce, the revenue will exceed expectations. The core products nanocarbon and esomeprazole have entered the rapid release stage. 1) Nanocarbon suspension injection (cannalin) is the only approved lymphatic tracer in China. It has good lymphatic tendencies. After being injected into local tissue, it can be quickly ingested by the lymphatic system, dyeing the lymphatic network and lymph nodes black, and achieving the purpose of lymphatic tracer. Tumor cells can be stained after injection during solid tumor surgery to facilitate the doctor's removal of the tumor. Currently, cannalin is widely used in the field of thyroid cancer. A great deal of academic work has been carried out and has been recognized by industry experts. Cannalin is not covered by medical insurance, but it can avoid the risk of surgery. There is a strong desire for clinical use, and there is little pressure to reduce prices. Judging from its bidding situation over the years, the price maintenance is relatively good. The 50mg specification has basically remained at 2,400 yuan/stick. Cannalin is mainly sold in tertiary hospitals and is already being used in the fields of stomach cancer, thyroid cancer, breast cancer, bowel cancer, etc. In the future, it will be promoted to all solid tumors, and the prospects are promising. We expect revenue to grow rapidly as penetration rates increase and indications expand; 2) esomeprazole enteric capsules (limexide) are the exclusive first class of 4 new drugs in China. The oral dosage form is not subject to consistent evaluation. It has a rapid, long-lasting, stable inhibition of gastric acid and a high Hp elimination rate. Approval was obtained as early as 2013, and listing sales began in 2014. Sales fell short of expectations due to early bidding progress. However, with the promotion of tenders in various provinces, the bid has now been won basically nationwide. Judging from the winning bid prices in each province, the maintenance is relatively good, remaining above 65 yuan/box. In terms of sales strategy, it also changed the early provincial and regional admission model, and established a professional team for promotion. Laimesu has already entered the rapid expansion stage. The current policy restrictions on the use of injectable PPI forms will also benefit oral administration, and short-term prices will continue to remain stable. It is estimated that revenue will continue to grow rapidly in 2019. The subsidiary, Hunan Kangyuan, lost money or narrowed. Losses from subsidiaries Chengdu Jinxing and Hunan Kangyuan had a significant impact on the company's current performance. Losses in Chengdu Jinxing and Hunan Kangyuan are all expected to be over 20 million in 2018. Among them, Kangyuan, Hunan, will continue to build a high-end infusion base due to high investment in fixed assets in the early stages and depreciation for many years. The highlight of 2019 is the launch and sale of drug mixers. The highlight of this product is to reduce pollution during liquid preparation. If the sales plan is successfully implemented, Kangyuan, Hunan, is expected to reduce losses. Profit forecasts and investment advice. The EPS for 2018-2020 is expected to be 0.14 yuan, 0.19 yuan, and 0.28 yuan, respectively, and the corresponding PE is about 42 times, 31 times, and 21 times, respectively. Referring to the valuation of comparable companies 40 times, we gave the company a target price of 7.60 yuan, covering the “buy” rating for the first time. Risk warning: Product sales may fall short of expectations, drug price reduction risk, subsidiary loss risk, and other unpredictable risks.