Annual report performance exceeded expectations The 2015 annual report was announced on February 2. Operating income was 780 million yuan, up 35.06% year on year; net profit attributable to listed companies was 78 million yuan, up 97.83% year on year; and earnings per share were 0.28 yuan, significantly exceeding previous forecasts. The distribution plan is: a cash dividend of 1 yuan (tax included) is distributed for every 10 shares, and 5 shares are transferred for every 10 shares. 2015 was an inflection point year, and 2016 entered a rapid development path. Through capital markets, epitaxial expansion has accelerated through mergers, acquisitions and restructuring, and has built a pharmaceutical integration framework with three sectors: traditional Chinese medicine preparations and Chinese medicine tablets, chemical raw materials and pharmaceutical intermediates, biopharmaceuticals, and research and development. In 2015, companies such as Dongli Enterprise Management, Longxi Baohetang Pharmaceutical, Wannianchang Pharmaceutical, and American Biopharmaceuticals were successively acquired, enriching the company's main business and increasing the company's revenue and net profit. In 2016, we will continue to focus on the development strategy of “one main, two wings, and involvement in biomedicine” to accelerate the implementation of mergers, acquisitions and restructuring projects. By industry, traditional Chinese medicine and chemicals are basically divided equally by industry. Sales revenue of traditional Chinese medicine preparations was 220 million yuan, up 36.23% year on year; revenue from Chinese herbal medicines and Chinese medicine drinks was 216 million yuan, up 18.79% year on year; the two together accounted for 55.77% of revenue. Chemical raw materials and intermediates achieved revenue of 315 million yuan, an increase of 22.09% over the previous year, accounting for 40.37% of revenue. It can be seen that traditional Chinese medicine and chemical medicine account for a similar share of revenue, evenly distributed. In the future, with the development of biopharmaceuticals, the main business will present a three-point pattern. The investment strategy raised the profit forecast. We expect earnings per share for 2016-2018 to be 0.43 yuan, 0.61 yuan, and 0.93 yuan respectively, corresponding to PE 90 times, 63 times, and 42 times, respectively. In view of the establishment of an inflection point in the company's performance and entering a period of rapid development, we continue to give it a “recommended” rating. Risks suggest that prices of Chinese herbal medicines fluctuate greatly; epitaxial expansion is lower than expected; risks in new product development, etc.