Matters: Company announcement: On March 17, 2017, the company announced its 2016 annual report. During the reporting period, the company achieved operating income of 217 million yuan, an increase of 11.87% over the previous year; net profit attributable to shareholders of listed companies was 28 million yuan, an increase of 21.50% over the same period last year. Our comments on this are as follows: Commentary: Relying on blood transfusions from major shareholders to maintain profits, the company's short-term revenue performance is in line with expectations. Compared with 2015, the company's revenue in 2016 increased slightly by 11.87%, achieving revenue of 217 million yuan. In the same period, the company maintained continuous investment on the health insurance side and achieved net profit of 28 million yuan during the same period, an increase of 21.50% over the previous year. After deducting asset disposal by major shareholders, non-net profit of 99 million yuan was deducted. Overall, the company's health insurance fee control business has yet to achieve a clear business model, and the performance is basically in line with expectations. The core business continues to be laid out, pending policy implementation and order release. In the past 4 years, the company's core health insurance fee control business has covered 24 provinces/municipalities directly under the Central Government and nearly 200 prefectures and cities across the country. Third-party medical insurance service framework agreements have been signed with the Zhanjiang Health Insurance Bureau in Hangzhou and Chengdu, and is fully responsible for local health insurance reviews. Judging from the promotion of the company's intelligent audit, the company gradually ended its strategic expansion cycle in 2017, began to deepen the intelligent audit system, and enhance the added value of its own products and services. Considering that in 2015, the state has already promulgated the “Administrative Measures on Government Purchase of Services (Interim)”. With the improvement of the company's audit capabilities and the solidification of local usage habits, it is expected that some of the company's stock customers will begin to purchase the company's services for a fee in 2017. Accumulate technological upgrades to accurately increase the added value of products. Against the backdrop of no significant increase in overall costs, the company focused more on intelligent product upgrades in 2016. The number of R&D personnel increased 24% year over year, R&D expenses increased nearly 166% year over year, and launched a 2.5 billion refinancing plan to focus on upgrading the real-time intelligent audit platform. 2017 is likely to usher in a pilot procurement period for fee-control services. We are optimistic that 2019 will drive commercial insurance demand. Combining development plans and product promotion, we judge that in 2017-18, the company is expected to obtain service purchase orders for medical insurance fee control. In particular, considering the promotion trend of the national health insurance network and offsite settlement, the underlying structure of medical insurance fee control is being improved at an accelerated pace, and the company's national card advantage is expected to gradually be converted into real service revenue. And with the development of more commercial insurance in 2019, PBM is expected to welcome real procurement demand from profitable institutions. risk factors. The health-care reform policy fell short of expectations; the refinancing plan fell short of expectations; and government procurement of public services fell short of expectations. Earnings forecasts, valuations and investment ratings. I am optimistic about the company's card position advantage. Due to the special nature of the industry, the company's monetization cycle may be long. Combined with the company's annual report, we maintained the company's profit forecast for 2017-18 at 0.04/0.12 yuan, and added the company's 2019 profit forecast of 0.17 yuan. The corresponding PE was 1139/356/245X, respectively. Considering the company's existing layout across the country, the card position advantage is clear, and the “increase in holdings” rating is maintained.