Tibet is vigorously supporting the development of Tibetan medicine; five stocks will benefit the most.

　　The reporter learned from the Health Department of the Tibet Autonomous Region that Tibet recently officially issued the "Opinions of the People's Government of the Tibet Autonomous Region on Further Supporting and Promoting the Development of Tibetan Medicine," which calls for establishing and improving a comprehensive Tibetan medicine service system and promoting the advancement of Tibetan medicine from Tibet to the rest of China and to the world.

　　The “Opinions” point out that we must adhere to the equal emphasis on Tibetan and Western medicine, fully leverage the distinctive advantages of Tibetan medicine, and pursue a development path that is rooted in tradition, oriented toward innovation, integrates Tibetan medicine and Tibetan pharmaceuticals, balances production with distribution, equally emphasizes resource development and conservation and construction, and combines traditional practices with modern approaches.

　　The "Opinions" state that it is necessary to establish and improve the Tibetan medical care service system, the Tibetan medicine talent cultivation system, the Tibetan medicine research and innovation system, the Tibetan medicine industry system, and the Tibetan medicine standardization system. This will comprehensively enhance the service capacity and innovation capability of Tibetan medicine, and promote the all-round development of Tibetan medicine in medical care, health care, scientific research, education, industry, and culture.

　　The “Opinions” call for creating favorable conditions for the development of Tibetan medicine. It is necessary to strengthen infrastructure construction and improve the infrastructural conditions of Tibetan medical service institutions at all levels; include Tibetan medical services and Tibetan medicines within the scope of medical insurance policies and essential drug policies; fully leverage the important role of paired assistance programs for Tibet; enhance the development of Tibetan medicine regulations and standardization efforts; bolster the cultural development of Tibetan medicine; expand international cooperation and exchanges in Tibetan medicine; and promote the advancement of Tibetan medicine from Tibet to the entire country and eventually to the world.

　　To effectively support and promote the development of Tibetan medicine, the "Opinions" call for further increasing investment in Tibetan medicine; allocating more of the autonomous region’s industrial development funds to the Tibetan medicine industry and intensifying support for its growth; standardizing the fees for Tibetan medical service items and the prices of Tibetan medicinal preparations; implementing tax preferential policies to foster the development of Tibetan medicine; and continuing to enforce specially favorable credit policies.

　　Tibetan medicine, known as the "peculiar gem of the snowy plateau," has a development history spanning over 2,300 years. It boasts a comprehensive theoretical system and rich clinical experience, demonstrating unique and remarkable efficacy in the treatment of chronic diseases, common ailments, and difficult-to-diagnose conditions. (Xinhua Net)

　　Qizheng Tibetan Medicine (002287): A Leading Tibetan Medicine Company, Valuation Tending Toward Reasonableness

　　The Q3 2009 report shows that from January to September, the company achieved operating revenue of 294 million yuan, an increase of 21.75% year-on-year; operating profit of 94.48 million yuan, up 7.80% year-on-year; net profit attributable to shareholders of the parent company of 104 million yuan, up 16.89% year-on-year; and earnings per share of 0.26 yuan.

　　The company was officially listed on August 28, 2009. In this offering, the company issued 41 million A-shares, bringing its total share capital after the offering to 406 million shares. The actual controller of the company is Ms. Lei Jufang, the Chairperson of the Board. Prior to the offering, she held a total of 90.81% of the company’s equity; following this public offering, she still holds 81.63% of the equity, maintaining an absolute controlling stake.

　　The company is a traditional ethnic pharmaceutical enterprise primarily engaged in the production, manufacturing, and sale of Tibetan medicines. Its current main products include Qizheng Pain-Relieving Plasters, Qingpeng Ointment, Tiebangchui Pain-Relieving Ointment, and other topical and oral Tibetan medicines. Among these, the Qizheng Pain-Relieving Plaster is the company’s flagship product and its primary source of revenue, accounting for over 85% of both revenue and gross profit.

　　The pain relief market boasts enormous potential, and as a leading enterprise, our company is poised to fully benefit from the industry’s growth. With the accelerating aging of the population, the number of patients suffering from musculoskeletal pain conditions such as rheumatism and rheumatoid arthritis is on the rise, driving steady growth in the pain relief market. Our flagship product, Qizheng Pain Relief Plaster, holds a leading position in the topical pain relief market and will fully capitalize on the market opportunities brought about by this industry growth.

　　Analysis of the Use of Proceeds from the Public Offering. Following this issuance, the raised funds will be allocated to the following three projects in order of priority: the expansion and renovation project for the Tibetan medicine production line, the construction project for the Tibetan Medicine Engineering Technology Center, and the marketing network development project. Currently, the company’s existing production lines can no longer meet the requirements of its future market strategy. The implementation of the Tibetan medicine production line expansion and renovation project will effectively address the bottleneck issue in production capacity.

　　Earnings Forecast and Valuation: We maintain our earnings forecast for the company as presented in our initial public offering analysis, based on a total share capital of 406 million shares following the issuance. We project that the company’s fully diluted earnings per share for 2009, 2010, and 2011 will be RMB 0.36, RMB 0.42, and RMB 0.49, respectively. Based on the closing price of RMB 25.11 from the previous trading day, the corresponding dynamic price-to-earnings ratios are 70x, 60x, and 51x. The company is a leading player in Tibetan medicine production, with its flagship products holding a leading position in the market. Currently, the company’s valuation has become more reasonable, and we assign it a “Neutral” investment rating for now. (Tianxiang Pharmaceutical Team)