Investment highlights: First quarter revenue increased by 18.27%, net profit increased by 6.97%. The first quarter achieved revenue of 598 million yuan, an increase of 18.27%, net profit of 53.12 million yuan, an increase of 12.90%, net profit of 51.38 million, an increase of 6.97%, and an EPS of 0.12 yuan, in line with expectations. In 2016, revenue increased by 16.79%, and net profit decreased by 22.29%, which was lower than expected, mainly because the progress of some of the company's hospital construction projects did not meet expectations and project income could not be settled in a timely manner; the sharp increase in accounts receivable led to a significant increase in accrued bad debt preparations compared to the same period last year. Since this year, the company's business has resumed growth, and the PPP model has gradually improved the company's profit structure. Building a “Shang Rong Model” comprehensive medical platform, the PPP model is expected to be rapidly replicated. The company built a “Shangrong Model” comprehensive medical platform and laid out the entire medical industry chain, including the three business segments of overall hospital construction, medical device production and marketing, and hospital logistics management services. The company will take medical construction as the lead and build four major industrial platforms, including medical logistics, consumables production and marketing, equipment production and marketing, and hospital investment. On this basis, it will use Internet technology to integrate offline medical resources and carry out mobile medical services in a timely manner, which is expected to become a large-scale comprehensive medical service provider in China. In 2017, on the basis of the successful operation of the Qinhuangdao Second Hospital and Dushan PPP project, the company continued to focus on developing hospital PPP projects. It is expected that it will take 3-5 years to invest in the construction and operation of more than 30 tertiary hospitals through the PPP model. The cost ratio for the period decreased by 0.42 percentage points, and the gross margin decreased by 0.85 percentage points. The company's gross profit margin for the first quarter was 23.85%, down 0.85 percentage points. The period expense ratio was 8.94%, a decrease of 0.42 percentage points, of which the sales expense ratio was 2.43%, a decrease of 0.29 percentage points, the management expense ratio was 5.56%, a decrease of 0.46 percentage points, the financial expenses ratio was 0.96%, an increase of 0.33 percentage points, and the operating cash flow per share was -0.08 yuan, a decrease of 185.05%. Build a “Shang Rong Model” comprehensive medical platform to maintain purchase ratings. Under pressure from local finances, the PPP model will become the main way to resolve local financial difficulties. With the further increase in demand for medical services, the Shang Rong model can share more policy dividends. Taking into account changes in the profit base in '16, we lowered our 17-18 EPS forecast of 0.29 yuan and 0.34 yuan (original forecast of 0.62 yuan, 0.88 yuan), and our first forecast of EPS in '19 was 0.39 yuan, an increase of 12%, 16%, and 15%, corresponding to the predicted price-earnings ratio of 55 times, 47 times, and 41 times; maintaining the buying rating.