Incident: On February 28, 2014, Jiu'an Medical released a performance forecast. In 2013, it expects operating income of 429 million yuan, an increase of 20.46% over the previous year; net profit of 57.98 million yuan, a year-on-year decrease of 16.62%, and an EPS of 0.02 yuan. Meanwhile, the company's stock price hit a standstill for two consecutive days on the 27th and 28th. Main views: 1. Performance is in line with expectations, new products and domestic sales performance are impressive, and traditional business continues to shrink. The company's performance forecast says that 2013 revenue is 429 million yuan, an increase of 20.46% over the previous year. We split this revenue. It is estimated that the iHealth series products will contribute about 60 million yuan, and the domestic Jiu'an series products will contribute about 160 million yuan, an increase of about 50% over the previous year; the traditional ODM business will continue to decline by about 20%, contributing about 200 million yuan. 2. The short-term increase in stock prices poses certain risks. Since we released our company report “Jiu'an Healthcare (002432): Level 2: Exploring Promotion Models” on December 31, 2013, as of February 27, the highest increase in the stage had reached 123%, making it the largest increase in the pharmaceutical sector. The catalyst for the rapid rise in short-term stock prices is the impressive performance of new products such as electrocardiographs and oximeters exhibited by the company at the 2014 CES conference, drawing the market's continued attention and enthusiastic demand for mobile health care. However, we believe that although the long-term value of the company is indeed worth paying attention to, the excessive rise has also accumulated short-term risk in stock prices. 3. The company's new products have formed a series, one position ahead of competitors. The Ihealth series already has a variety of home mobile health products such as blood pressure monitors, blood sugar meters, body weight scales, exercise recorders, oximeters, etc.; at the same time, there are also professional mobile medical devices such as electrocardiographs. New products have also been introduced in smart homes and mother and child monitoring. There is no doubt that the company's mobile health products are already one position ahead of the competition. How to make good use of the advantages of existing products to expand its leading position is the most important question for the company to think about this year. Expanding this advantage requires not only adding more functions to the product, but also making breakthroughs in promotion channels to complete the expansion from B-C to B-B-C. 4. Having a channel advantage can truly occupy the high ground of the mobile medical market. We believe that the advantages of hardware are not enough for Jiu'an Medical to occupy an advantageous position for a long time; only gaining a first-mover advantage in channels can be considered to occupy the high ground in the mobile medical market. Only by rapidly promoting a series of products to medical insurance and hospital doctors, occupying professional channels, and forming user stickiness can it be considered a true mobile medical treatment. Otherwise, it can only be hovering between consumer electronics and medical devices, and the advantages formed in product hardware are no longer obvious. 5. Another key is the software platform. As a traditional ODM manufacturer, Jiu'an Medical needs to relearn when it comes to building software and managing data. From the first version of the software to today's platform-based ihealthapp, we're delighted to see the company's ability to learn quickly. Hardware is only the entry point and gripper for data; data management and software function development are the real killers. Hardware is the foundation. Without hardware, software is no foundation, no source of water; software is a vine, and through the extension of the vine, the function of the product can be continuously extended. We think the ihealthapp could improve in the following areas: 1. Social features. Adding functions such as friend sharing and data exploration to the software can not only enhance patient-doctor, patient-friend, and even family communication between parents and children. 2. Doctor intervention interface. After testing the patient's physical signs, the doctor can follow up quickly, which is conducive to monitoring and managing the condition. 3. Insurance intervention interface. If insurance companies were able to monitor policyholders' data in batches, it would be beneficial for insurance companies to intervene in the early stages of illness and avoid spending large premiums. 4. Use medical medication management interface. If the user's signs are abnormal, the software can quickly and accurately make medication recommendations and doctor recommendations, which will greatly enhance the commercial value of the iHealth platform. Once the user experience and platform advantages are fully exploited, big data can be discovered. Conclusion: The mobile medical market has huge potential for development. The company started early, but there are more and more competitors. Judging from now on, the company has a leading edge in product diversity, software development, manufacturing, platform building, and brand promotion. This field is on the rise, and the product promotion model and profit model are still unclear. Jiu'an is also actively experimenting with cooperation with various participants such as hospitals, doctors, insurance, etc., and is looking forward to exploring a smooth product sales path and profit model. The company has the potential to grow bigger and stronger in terms of management, products, and marketing, and will be in a period of rapid development in the next few years. Therefore, although from the perspective of PE, the company's stock price cannot be considered very “cheap,” the surprise that exceeds expectations from time to time during this growth process will make investors feel that it is “worth the money.” Maintain the company's profit forecasts of 0.02 yuan and 0.11 yuan for 2013-2014, and maintain a highly recommended rating. Risk warning: the risk that new products will not progress as expected; the risk that costs will rise sharply; the risk of increased exchange losses; the risk that gross margin will decrease due to rising raw material prices; and the risk that shareholders' holdings will be reduced due to the lifting of the ban on some restricted stocks.