According to the 2008 annual report, the company's annual operating income was 965 million yuan, up 5.99% from the same period last year; operating profit was 26.27 million yuan, down 11.85% from the same period last year; net profit belonging to the parent company was 20.01 million yuan, down 0.23% from the same period last year; and basic earnings per share was 0.13 yuan.

There has been a slight increase in revenue and profits are the same as last year. The company's income increased slightly during the reporting period, of which the proportion of wholesale business increased to make up for the decline in retail sales. The operating income of pharmaceutical retail reached 583 million yuan, down 3.56% from the same period last year, while that of wholesale business reached 381 million yuan, an increase of 24.92% over the same period last year. The ratio of wholesale to retail has changed from 34 ∶ 66 in the same period last year to 40 ∶ 60 today. The wholesale business increased by 24.92% over the same period last year, of which the business growth brought about by the variety of agents increased by 50% compared with the same period last year. Due to the increase in the proportion of wholesale business and rising costs, the company's comprehensive gross profit margin during the reporting period was 18.01%, down 1.5 percentage points from the same period last year. The rate of sales expenses was 8.35%, down 0.79% from the same period last year. However, the control of expenses during the period could not hide the decline in gross profit margin, resulting in a net profit belonging to the parent company of 20.01 million yuan, down 0.23% from the same period last year.

The new policy of zero margin may have a certain impact on the company's future performance. In Shanghai, there are 232 community health service centers, 686 community health service stations and more than 1800 rural health centers benefited from the new policy of "zero difference rate". These community health service institutions have become "zero difference rate" affordable pharmacies under government subsidies, attracting a large number of community residents to seek medical treatment and dispensing, thus reducing both the sales volume and prices of drugs in retail pharmacies in the community, affecting the future profitability of the company's retail business to a certain extent.

Profit forecast and investment rating. We think that in the future, we can pay attention to the development of the company relying on the scale advantage and resource advantage of Bailian Group and Bailian commercial chain company. It is estimated that the EPS of the company in 2009-10 is 0.16,0.18 yuan, compared with the current stock price of 7.24 yuan, the corresponding dynamic price-to-earnings ratio is 24 times and 22 times respectively. Maintain a "neutral" investment rating.