2020Q3 performance accelerated month-on-month, in line with expectations. In the post-epidemic era, the industrial plate has stabilized, and the international trade plate is worth looking forward to. The integrated and two-wing strategy will blossom in an all-round way, and the market development will enhance the core competitiveness.

2020Q3 performance accelerated month-on-month, in line with expectations. In the first three quarters of 2020, the company realized revenue, return net profit and deducted non-return net profit of 302.67 and 12.38 billion yuan, respectively, compared with the same period last year, which was + 16.30%, 27.80% and 29.69%, respectively, and the net operating cash flow was-666 million yuan. From a single quarter, 2020Q3 realized revenue, return net profit, and deducted non-return net profit of 114.58, 461, 000 respectively, compared with the same period last year. The company's 2020Q3 performance recovered steadily and the profit end accelerated significantly compared with the previous month, mainly benefiting from the large export of epidemic prevention materials on the international trade plate and the domestic pharmaceutical commercial plate actively undertaking epidemic prevention business and exploring new sales models, which were in line with expectations.

In the post-epidemic era, the industrial plate has stabilized, and the international trade plate is worth looking forward to. During the reporting period, the pharmaceutical industry sector was affected by the epidemic situation and collection, medical insurance catalogue adjustment, limited resistance and other policy factors; the epidemic situation in the commercial sector led to the reduction of hospital net sales business and the extension of the account period, and Q3 expected business development has gradually stabilized. The significant growth in the international trade sector is mainly due to the company's efforts to do a good job in the storage and export of epidemic prevention materials during the epidemic, to efficiently promote the import and export business related to epidemic prevention, and to take this as an opportunity to speed up the construction of the international marketing system. South America, Africa, West Asia, Central Asia and other regions to establish in-depth consolidation of stock business, and actively expand the blank market, strengthen the rolling development and promotion of overseas projects. We expect the rate of sales expenses to decline slightly during the reporting period, mainly due to the decrease in sales of the company's pharmaceutical industry products promoted by the epidemic and collection and acquisition; the rate of management expenses (including R & D) is basically stable, mainly due to the slight delay in the progress of some research projects during the epidemic period, with the full resumption of work and production, the research projects have been gradually restored recently.

The integrated and two-wing strategy will blossom in an all-round way, and the market development will enhance the core competitiveness. 2020Q3 has obtained the production approval of oxiracetam injection and Atto vastatin calcium tablets, and the company amoxicillin capsules, metformin hydrochloride sustained-release tablets and two specifications of finasteride tablets have successfully won the bid in the national centralized drug procurement. Tianfang Pharmaceutical, a wholly-owned subsidiary of Tianfang Pharmaceutical Co., Ltd. plans to transfer daroxetine hydrochloride owned by Xinlitai for 28 million yuan in Chinese mainland, including but not limited to product research and development, production, sales, marketing, relevant patents and other related patents, the one-in-one and two-wing strategy is in full bloom. At the same time, the company continues to strengthen the construction of the marketing system, carrying out the development idea of "attracting investment to the county, promoting to the hospital, OTC to the store", fully promoting the development of the grass-roots market, tamping the market competitiveness, speeding up the development of the non-standard market and the second and third terminals, focusing on promoting the construction of the promotion line of its own varieties. During the reporting period, the company continued to explore online sales models, cooperate with mainstream e-commerce businesses to increase online product sales, and build regional advantages to rapidly extend the market to the western region by establishing a Chinese medicine-Chongqing pharmaceutical "business consortium". Initially realized the national network layout, promoted the sinking of sales channels, and actively carried out "Internet +"

And other innovative sales models to enhance the core competitiveness.

Risk factors: international business risk, customer credit risk, the decline of gross profit margin caused by excessive competition, Tianfang Pharmaceutical Company's transfer of dapoxetine hydrochloride rights and interests progress is lower than expected and so on.

Profit forecast and rating. The company's industrial sector fine investment and commercial sector point strong Netcom strategy continues to advance, taking into account the post-epidemic era income is expected to gradually recover, profitability is expected to improve, adjust the company's EPS forecast for 2020-2022 to 1.12 EPS 1.31 shock 1.50 yuan (the original forecast is 1.02 1.17 shock 1.36 yuan), maintain "increase"

Rating.