Incident: Jinshi Dongfang and its wholly-owned subsidiary, Chengdu Jinshi, intend to purchase 100% of Asia Pharma's shares by issuing shares and paying cash from all 49 shareholders of Asia Pharmaceuticals at a transaction price of 2.1 billion yuan. Asia Pharmaceutical is an excellent domestic pharmaceutical company. The company's core product is the “Quick” series of cold medicine, which is one of the top ten well-known domestic cold medicine brands. The company also produces and sells Western medicine, modern proprietary Chinese medicines and health food. It has 90 pharmaceutical production approval numbers and 2 health food production approval numbers, covering various drug categories such as colds, respiratory system, cardiovascular system, digestive system, and vitamin supplements. Asia Pharmaceutical achieved revenue of 629 million yuan and net profit attributable to parent company of 96 million yuan in 2015. According to the “Profit Compensation Agreement”, Asia Pharmaceuticals promised cumulative net profit of 126.5981 million yuan, 2804.708 million yuan, and 444.34 million yuan for the end of the 16, 17, and 18 years, respectively. Through this transaction, Jinshi Dongfang will achieve a dual main business development model of machinery manufacturing and pharmaceutical manufacturing, and profits will be greatly increased. Jinshi Dongfang achieved operating income and net profit of 117 million yuan and 23.38 million yuan respectively in 2015. Against the backdrop of a slowdown in the domestic economy and a decline in the growth rate of fixed asset investment, the development of the company's original main business, steel-reinforced plastic composite pipe business, has encountered bottlenecks, yet the long-term development of the domestic pharmaceutical industry is promising, consumer demand for pharmaceutical products is stable, and it has entered the pharmaceutical industry on the basis of its main business in machinery manufacturing, which has greatly increased the company's profitability and optimized revenue structure. The company's strategic transformation is worth looking forward to. Risk warning: The fixed increase is progressing less than expected.