Core view: The company that acquired 60% of Zhaoyang Biotech's shares with 23.6 million yuan issued an announcement to increase the capital of Zhaoyang Biotech with 9.439,800 yuan and hold 24% of its shares; at the same time, it obtained 36% of Zhaoyang Biotech's shares with 14.159,700 yuan. After the capital increase and share transfer mentioned above are completed, Xiangxue will directly hold 60% of Zhaoyang Biotech's shares. The company's purchase price is reasonable. Based on net assets of 21.7 million yuan on December 31, 2015, the company's acquisition PB is 1.81, and according to the 2016 performance commitment of 4 million yuan, PE is 9.83. Zhaoyang Biotech is deeply involved in terminal channels in Guangdong. Local terminals have strong control. Zhaoyang Biotech is a pharmaceutical business enterprise that mainly deals in biological products, supplemented by the management of new specialty drugs, essential medicines, precious Chinese medicine tablets, health food, and medical devices. The company's sales network covers the entire Guangdong and South China regions. The main sales channels are hospitals, primary medical institutions, disease prevention and control centers, pharmacy supermarkets, etc., and it has strong control over terminals. Furthermore, the company also has a drug distribution system for cold chain logistics. Performance promises ensure growth, and mergers and acquisitions help Xiangxue control Guangdong Terminal ① Zhaoyang Biotech's revenue and net profit in 2015 were 112 million yuan and 2.05 million yuan respectively, up 244% year on year and turning a loss into a profit, respectively. The performance growth rate was relatively rapid. Furthermore, net profit after deductions for the three years 2016-2018 was promised to be 400, 58, and 6.9 million yuan, respectively; the cash flow from operating activities was 360, 52, and 6.2 million yuan, respectively, and the performance promise locked in growth. ② After the acquisition of Shanghai-Qiao, Xiangxue's Chinese medicine tablet business focused on the Anhui region, while Guangdong's local self-control terminal capabilities have not been strong. The merger and acquisition of Zhaoyang Biotech has helped the company strengthen control over local terminal channels. ③ Furthermore, Zhaoyang Biotech has channel advantages in managing biological products and cold chain distribution, which helps the company extend and improve supply chain and value chain management and expand the company's development in the biological products industry. The 16-18 performance is expected to be 0.42 yuan/share, 0.50 yuan/share, and 0.57 yuan/share, respectively. The company's traditional business endogenous improvement, the tablet extension industry integration, and TCR technology is comparable to international leaders. We expect the company's 16/17/18 EPS to reach 0.42/0.50/0.57 yuan (2015 EPS is 0.27 yuan). The current stock price corresponds to PE 34/28/25 times, maintaining the “buy” rating. Risks suggest that merger integration is lower than expected; Chinese medicine tablet business development is lower than expected;