Event: the company announced that in the first three quarters of 2021, the operating income was 207 million yuan, up 32.83% over the same period last year; the net profit was 39.66 million yuan, up 38.91% from the same period last year; and 36.86 million yuan was deducted from non-net profit, an increase of 72.17% over the same period last year.

Q3 performance slightly exceeded expectations, looking forward to full-year performance. The company's Q3 realized operating income of 76.91 million, an increase of 16.99% over the same period last year, a net profit of 21.04 million, an increase of 38.08%, and a deduction of 20.87 million of non-net profit, an increase of 47% over the same period last year. 55%, the performance in a single quarter slightly exceeded expectations. The company's performance shows strong seasonal fluctuations. Q4 revenue accounts for about half of the whole year. In the annual main business income from 2017 to 2019, Q4 accounted for 51%, 43% and 51% of the annual total income respectively. According to the company report, as of the end of June 2021, the company's on-hand orders were 302 million, an increase of 93.59% compared with 156 million in the same period last year. We believe that the company's annual performance is expected.

The gross profit margin is high and stable, and the cost is well controlled. The gross profit margin of the company Q3 is 63.07%, which is higher than that of Q2. The gross profit margin of the first three quarters is 60.07%, which is lower than that of the same period last year. We believe that it is due to the difference in gross profit margin between different projects, and the gross profit margin of the company as a whole basically remains high and stable. From the point of view of the cost side, the expense rate during the Q3 period of the company was 34.27%, which was significantly lower than that of the same period last year and month-on-month. The sales expense rate, management expense rate, financial expense rate and R & D expense rate were 13.43%, 9.34%, 14.21% and-2.71% respectively, with year-on-year changes of-1.46pct,-4.10pct, + 4.00pct and-4.60ct, in which the R & D rate increased significantly, which was caused by the company's continuous expansion of product lines and application scenarios. This is also an important support for the company to maintain high gross profit. In the first three quarters, the company's expense rate fell by 4.87pct to 43. 5% year-on-year. 56%, the cost is well controlled. The company's cash flow was under short-term pressure, with a net operating cash flow inflow of 11.34 million in the first three quarters, a decrease of 13.32 million compared with the same period last year, mainly due to the accelerated pace of upstream payment due to the shortage of upstream raw materials and the increase in cash outflow to pay employees' salaries and taxes.

The track is full of growth and the ability of customized service is scarce. The medical materials intelligent management system industry is in the growth stage, the market saturation is low, it is a blue sea track with full potential, and after the epidemic, the provinces speed up the construction of medical deficiency board, and the rapid growth of new hospitals accelerates the growth of the industry. By the end of 2018, the company has a market share of 28.5% in the field of outpatient pharmacy automation, has a rich product line, has a leading market position, and has a keen insight into market demand, respond in a timely manner, and quickly turn customer demand into new products. In addition, the company has the scarce customized service capability in the industry, and won the bid for the Nantong Medical Center project in 2020, with a project amount of 49.59 million yuan; in the first half of this year, it won the bid "Integrated Intelligent Storage and Distribution system of Kunshan Western Medical Center" and "Purchasing and installation of automatic Pharmacy Storage and Distribution Library of Eastern Medical Center", with the project amount of 48.87 million yuan and 43.79 million yuan respectively.

Profit forecast and investment advice: we expect the company's operating income from 2021 to 2023 to be 408 million, 545 million and 726 million respectively, an increase of 31.7%, 33.6% and 33.2% respectively over the same period last year, and the net profit of home ownership is 94 million, 122 million and 162 million respectively, an increase of 31.3%, 30.0% and 32.4% over the same period last year, corresponding to a PE of 29.5X, 22.7X and 17.2X respectively.

Risk hints: product and technological innovation R & D risk, industry competition risk, brain drain risk, risk of lagging behind or not updating public information in a timely manner.