Main points of investment:

Revenue in the first three quarters increased by 8.4%, while net profit fell by 27.6%. In the first three quarters of 2014, the company achieved revenue of 1.81 billion, an increase of 8.4%, and a net profit of 55.97 million, a decrease of 27.6%, which was basically in line with expectations. Among them: the revenue in the third quarter was 630 million, up 12.1%, and the net profit was 15.56 million, down 25%. The increase in revenue in the first three quarters of the company was mainly due to the increase in revenue from the pharmaceutical preparation business and drug circulation business; the decline in the company's net profit was mainly due to the decline in the gross profit margin of raw materials, the substantial increase in financial expenses (interest expenses) caused by loans for the construction of soil and water production bases in Chongqing, and the increase in consolidation depreciation in the new plant.

During the period, the expense rate increased by 1.48 percentage points, mainly due to the increase in the financial expense rate. The company's gross profit margin in the first three quarters of 2014 was 18.95%, down 0.55 percentage points from a year earlier. During the period, the expense rate was 15.31%, up 1.48% from the same period last year, of which: the sales expense rate was 5.02%, up 0.08% from the same period last year, the management expense rate was 7.05%, down 0.12% from the same period last year, and the financial expense rate was 3.24%, up 1.52% from the same period last year. Net operating cash per share-0.03 yuan.

Part of the medical service continues to advance. Integrated medical merger and acquisition has been approved by the Securities Regulatory Commission, and cooperation with Peking University Medicine in the future will achieve full coordination with Peking University Medical Department hospital resources and Peking University medical resources, and achieve a perfect layout and extension of oncology business industry chain. The company has also signed a strategic cooperation agreement with Peking University Cancer Hospital to jointly establish the "Peking University Medical Cancer Hospital Management Company" as a platform to establish China's largest oncology specialist medical network with "Peking University tumor" as the brand. Peking University Pharmaceutical has also cooperated with Detong Investment to set up an industrial M & An investment fund, which is mainly focused on investing in Peking University Pharmaceutical strategic development projects.

Peking University founder Group Hospital Asset Securitization platform to maintain the overweight rating. As a group hospital asset securitization platform, Peking University Medicine has a large market capitalization space in the future, which is worthy of long-term attention. We maintain EPS0.08 yuan, 0.10,0.13 yuan in 14-16 years, year-on-year growth of-35%, 18%, 27%, corresponding to the forecast price-to-earnings ratio of 240,204,160 times. If we consider integrated medical mergers and acquisitions, and only in the fourth quarter of 2014, we maintain 14-16 EPS0.09 yuan, 0.21,0.27 yuan, year-on-year growth of-28%, 121%, 31%, corresponding to the forecast price-earnings ratio of 217,98 and 75 times. Maintain the overweight rating.