Incident: The company issued an announcement on the evening of May 3 to reach a strategic cooperation with Ant Financial. The specific scope of cooperation includes: 1) “Internet+Health Insurance” mobile payment business cooperation. The two sides cooperate to provide medical insurance mobile payment related solutions to the health insurance department in Zhejiang Province, establish a model that can be demonstrated and promoted, and cooperate to carry out replication and promotion throughout the country. 2) “Internet+Healthcare” smart medical business cooperation. The two sides have carried out in-depth cooperation in the smart medical business. The company's “Medical Express” smart medical service has entered the Alipay city service platform owned by Ant Financial. Combined with Alipay's billing and payment financial services, it provides the public with a one-click payment service that integrates health insurance and a full-process smart medical treatment service. 3) “Internet+Human Society” urban service business cooperation. The two sides cooperate to provide urban service solutions for the social sector, including social security, health insurance, employment, talent, and entrepreneurship, etc., to jointly provide more convenient government public services to the public through traffic from Alipay city services, etc., as well as government market resources and platform technical support provided by Ant Financial. 4) “Internet+medical insurance pharmacy” financial service business cooperation. The two sides cooperate to provide Alipay billing financial services for health insurance pharmacies, and explore cooperation and innovation in health insurance revenue and account factoring services, etc. 5) Application exploration and innovation of “Big Health Artificial Intelligence 2.0”. Based on the artificial intelligence joint research center jointly built by the company and Zhejiang University, combined with the company's industry experience in informatization in the big health industry, and Ant Financial's technology accumulation in financial clouds, big data, risk prevention and control, etc., we are jointly promoting artificial intelligence 2.0. The social sector and the medical industry cooperate in the application of artificial intelligence and big data. With the consent of the relevant regulatory authorities, the two sides have carried out special research and cooperation on application directions such as human society, health insurance, and medical care. Comment: The advantages and resources of the two sides complement each other. Cooperation is expected to empower medical institutions in all aspects and enhance residents' experience in seeking medical treatment. Ant Financial's position is centered on user health management, building an ecological service system where hospitals, medical insurance, and medicine are “linked by three doctors”. There is an obvious synergy between the two sides' superior resources. The cooperation is expected to empower medical institutions in all aspects and enhance residents' experience in seeking medical treatment. First, improvements in payment processes (promoting mobile payments for health insurance) are expected to be the starting point for hospitals to embrace Internet business. As the data resources of both parties are used rationally under the supervision of relevant regulatory authorities, value-added services such as fee control, commercial insurance, and medical credit payments are expected to be launched later, significantly improving the medical experience. The company is a social security informatization port with multiple domestic identities, and cooperation will accelerate the monetization of business resources. Xinenpu, a subsidiary of the company, is a regional leader in social security informatization in China. Its mature regional business covers Zhejiang, Jiangsu, Anhui, Jiangxi, Hunan and other provinces. Based on the card slot advantages of the social security informatization port, the company is vigorously developing internet-based services. The main directions include: 1) internetization of social payment services; 2) medical insurance mobile payment services. Among them, the medical insurance mobile payment business has provided relevant services for health insurance in all parts of Zhejiang (provincial level, Huzhou, Quzhou, Yiwu, Anji, etc.) and medical institutions at all levels (the First Affiliated Hospital of Zhejiang University School of Medicine, Shaw Hospital Affiliated to Zhejiang University School of Medicine, Zhejiang People's Hospital, Zhejiang Tongde Hospital, Zhejiang Hospital of Traditional Chinese Medicine, Zhejiang Hospital, etc.). Using traffic portals such as Alipay City Service, which is owned by Ant Financial, the company's superior business resources are expected to accelerate the transformation from the government side to the consumer side. Mobile payment for medical insurance will become an entry-level tool for medical consumption, and its value is huge. The market currently lacks a payment instrument for medical consumption scenarios. The main reason is that it is difficult to connect commercial insurance with social security, technical reasons, and government safety considerations. The medical insurance mobile payment product created by the company based on the resource advantages of social security informatization can achieve “medical insurance+personal expenses” with one click payment, which means that the consumer's payment experience for medical treatment has been optimized. As far as medical consumption is concerned, the opening of payments means accounts (capital) and traffic (entry). The company's health insurance payment products are expected to become an important part of Ant Financial's medical landscape. At the same time, we have noticed that the relevant cooperation will also extend to the development of artificial intelligence and big data application cooperation in the social and medical industries. We judge that the advanced function of medical payment is fee control. The upgrade of fee control tools depends on the combination of big data+medical and pharmacoeconomics. Through clinical guidance and machine learning capabilities, the cooperation between the company and Ant Financial is expected to create excellent investment proposals for fee control tools: the complementary and synergistic effects of the two partners are obvious, which is expected to empower medical institutions in all aspects and enhance the medical experience for residents. The medical business map created by joint efforts is expected to become an important pole for China's healthcare industry in the future. It is estimated that the company's preparation EPS for the 2017 and 2018 exams will be 0.50 and 0.55 yuan, maintain the buy-A rating, and the target price for 6 months is 17 yuan. Risk warning: the progress of cooperation falls short of expectations