Event: The company released its 2020 three-quarter report. 2020Q1-Q3 achieved operating income of 1.11 billion yuan, an increase of 14.7% over the previous year; realized net profit of 290 million yuan, an increase of 35.9% over the previous year; and deducted non-net profit of 260 million yuan, an increase of 26.4% over the previous year. The performance was good, and the overall performance was in line with expectations. Q3 is expected to resume growth in the fourth quarter due to downstream digesting inventories. Q3 achieved revenue of 290 million yuan in a single quarter, a year-on-year increase of -21.9%, net profit of 74 million yuan, a year-on-year increase of -27%, and a year-on-year increase of -45.3% after deducting non-net profit of 56 million yuan. Due to a high base of historical factors in the third quarter of last year, the company discontinued production and maintenance in the third quarter of this year, and apparent performance was affected. Furthermore, during the epidemic in the first half of this year, downstream pharmaceutical manufacturers increased stocking to guarantee production and supply, and new demand due to inventory consumption declined in the third quarter. It is expected that the inventory removal process will be completed in the short term, and the company is expected to resume growth in the fourth quarter. The profitability of 2020Q1-Q3 has increased, with an overall gross profit margin of 43.8%, +1.4pp over the same period last year. The period fee rate was 17.59%, -1.4pp year on year, driving net interest rate +4.1pp year on year. Promote fixed stock issuance and fund-raising projects to support integrated strategies. The company continues to promote stock issuance projects and will raise no more than 1 billion yuan in capital. The funds raised after deduction of issuance fees are intended to be used for the “Fuxiang Biomedical Project” and the “Annual Production of 616 tons of Navir intermediates and 900 tons of Batam intermediates”. Carrying out a high-efficiency penemide antibiotic construction project is conducive to the company's vertical integration (intermediate-API) strategy and enhances the overall competitiveness of the enterprise. The fund-raising project will bring the company the production capacity of navirus-like intermediates, further expand the scope of the company's antiviral drug intermediates business, and is expected to expand downstream API business in the future. Innovation lays the foundation for long-term development. By the end of 2020H1, the company had obtained a total of 48 national patents, including 29 invention patents, 1 US invention patent, and 22 products were recognized as provincial key new products; and 1 new invention patent was declared in 2020H. The company is a mainstream supplier of beta-lactamase inhibitors in the world. It is one of the few domestic manufacturers of carbapenem-type phenem products with a full industry chain layout from initial raw materials to downstream APIs, and one of the major suppliers of lovirine intermediates in the global market. Its business includes antibiotic products and antiviral products. The company insists on strengthening R&D and innovation capabilities, which is conducive to future long-term development. Profit forecasts and investment advice. Affected by changes in share capital, the EPS for 2020-2022 is expected to be 0.86 yuan, 1.07 yuan, and 1.33 yuan respectively, corresponding to current valuations of 17 times, 14 times, and 11 times, respectively. The company issued a fixed increase plan, improved the strategy of vertical integration from pharmaceutical intermediates and APIs to pharmaceutical production, optimistic about the company's long-term development, and maintained a “buy” rating. Risk warning: risk of sharp drop in API prices; risk of environmental regulatory penalties; production capacity release progress or failure to meet expectations.