Deducting non-profit increased 17% in 2019, and performance was slightly lower than expected. The company announced that it achieved revenue, net profit from mother, and net profit of 21.6, 290 million yuan in 2019, up 5%, 21%, 17% year on year. Performance was slightly lower than expected (previous net profit forecast value of 320 million yuan in 2019), and 1Q20 achieved revenue, net profit, net profit after deduction of 4.91, 0.77, and 74 million yuan, year-on-year changes of -15%, -24%, -17%. Considering the impact of the pandemic, we have lowered our profit forecast. We expect net profit of 32/3.7/4.0 billion yuan in 20-22 (previous value of 350/3.9 billion yuan), an increase of 9%/14%/9% over the previous year, and an EPS of 0.56/0.64/0.70 yuan. Referring to comparable company valuations (predicted PE average value of 18x in 2020), considering that the growth rate was downgraded, the valuation was given a certain discount, the PE valuation in 2020 was 16-18 times, and the target price was 9.02 to 10.15 yuan (previous value: 9.75 to 10.83 yuan), maintaining the “buy” rating. Ointment: In 2019, Tongliao achieved double-digit growth, and general medicine patches achieved steady growth. In 2019, revenue for plasters increased 10% year on year to 1.38 billion yuan, and 1Q20 revenue fell 24% year on year. Considering the recovery in pharmacy repurchase demand after the pandemic, we expect positive growth throughout the year: 1) We estimate that our flagship product, Tongliao Pain Relief, revenue in 2019 is about 600 million yuan, with a double-digit year-on-year growth rate (sales volume up 11% year on year), mainly due to the promotion of OTC and the promotion of hospital agents, and is expected to increase revenue by 5% in 2020; 2) The revenue of general medicine patches is expected to increase slightly in 2019. Among them, sales of bone cream and wound cream increased by 4 to 6%, and sales of joint cream fell slightly by 4%. We expect steady growth in 2020; 3) Sales of pediatric antipyretic patches fell 5% year on year, and we expect steady growth in 2020. Oral preparations: steady growth in 2019 The revenue of oral preparations in 2019 was basically the same as the previous year: 1) The revenue of capsules in 2019 was basically flat to 520 million yuan, Peiyuan's sales fell slightly by 3%, and the sales volume of Ginseng and Astragalus increased by more than 20%. Considering Peiyuan and Shenqi's clinic coverage, we expect capsule revenue to grow by about 10% in 2020; 2) tablets (mainly Danlu tablets), the 2019 year-on-year revenue is basically flat at 86 million yuan (Danlu's sales volume has declined, and price increases are expected to boost revenue by 17%), so far Play OTC and Clinic, we expect capsule revenue to grow in single digits in 2020. Operating indicators from 2019 to 1Q20 were stable 1) Stable growth in all terminals: retail pharmacy channel revenue increased 3% year on year in 2019 to 1.22 billion yuan, hospital and clinic channel revenue increased 8% year on year in 2019 to 911 billion yuan; 2) accounts receivable (accounts+notes) 1Q20 was about 60 billion yuan, the same year on year; 3) 1Q20 cash income ratio was about 106%, net cash flow was about 67 million yuan, lower than net profit. Risk warning: Clinic promotion falls short of expectations, and pressure on hospitals to control fees exceeds expectations.