Events: from January to September 2013, the company achieved operating income of 522 million yuan, an increase of 79.49% over the same period last year; operating costs of 125 million yuan, an increase of 49.92% over the same period last year; net profit actually attributed to the parent company was 58.393 million yuan, an increase of 65.86% over the same period last year; net assets belonging to the owner of the parent company were 1.733 billion yuan, an increase of 274.28% over the same period last year; and basic earnings per share were 0.22 yuan.

Comments:

1. The reorganization is completed and the high-quality assets are injected, and the result of the integration remains to be seen. During the reporting period, the company successfully implemented a major asset restructuring with the approval of the document "Securities Regulatory Commission approval [2013] No. 633" of the China Securities Regulatory Commission. As of June 19, 2013, the transfer of ownership of the underlying assets of the issued shares has been completed; on June 27, 2013, the registration procedures for additional shares of the issued shares purchased assets have been completed. As of June 25, 2013, the company has completed the relevant supporting financing work; on June 26, 2013, the supporting funds have been received; and on July 8, 2013, the registration procedures for the shares related to the non-public offering of matching funds have been completed. After the completion of this major asset restructuring, the company's core competitiveness has been further enhanced. After the completion of the restructuring, Magic Pharmaceutical and Baiqiang Pharmaceutical injected high-quality assets into listed companies.

Through the injection of high-quality pharmaceutical assets, expand the scale of the company's assets, enhance the company's strength, the company's product variety has been greatly enriched, further improve the company's asset quality and sustainable profitability, and greatly enhance the company's long-term competitiveness. With the injection of Magic Pharmaceutical and Baiqiang Pharmaceutical, the company has formed a relatively perfect product chain in anti-tumor series, cough series, children series, cardiovascular series, anti-rheumatic series, anti-fungal series, tonifying series and so on. Greatly improve the company's profitability and anti-risk ability. At the same time, a large number of drug approval number reserves, for the company's next step of new product promotion and listing and new profits laid a good foundation.

At present, the subsidiary products that make great contribution to the company's profits are Xuan Xuanjing and sodium cantharidinate injection of Guizhou Jinqiao Pharmaceutical Co., Ltd., and powerful loquat dew and loquat cough capsule of Guizhou Magic Pharmaceutical Co., Ltd. Guizhou Baiqiang Pharmaceutical's sodium cantharidate vitamin B6 injection, Yindanxintai dropping pills and other products. Among them, Magic Pharmaceutical holds a 92.58% stake in Jinqiao Pharmaceutical, and sodium cantharidinate injection is suitable for the treatment of primary liver cancer and other tumors. In mid-late October, the subsidiary Guizhou Jinqiao Pharmaceutical small volume injection (antineoplastic drug) has passed the national new version of GMP certification, this time passed the GMP certification of sodium cantharidate injection, an anticancer drug, sodium cantharidinate injection and related products constitute the company's main income of nearly 20%.

2. Profit forecast. As the company has just completed its restructuring in the middle of this year, the effect of resource integration after asset injection remains to be seen, so it will not be rated for the time being.

3. Risk hints: 1) the resource integration after asset injection is not up to the expected risk; 2) competition aggravates the risk.