The incident company released its annual report on the evening of April 27. During the reporting period, it achieved operating income of 4,080 billion yuan, a year-on-year decrease of 24.94%, and realized net profit of 245 million yuan, an increase of 11.15% over the previous year, after deducting net profit of 60.368 million yuan. The review performance was in line with expectations. The company's traditional business mainly includes smart cities, smart business and smart lifestyle businesses. The traditional business lost about 210 million yuan in 15 years, and finally achieved a total profit of 270 million yuan in total profit from the transfer of 480 million shares, divested Xiaotong Network, which lost nearly 100 million dollars in 15 years, divested 76% of Kuawei Technology's shares in December '16, and lost 8.38 million in the first three quarters of '16. Therefore, taking a comprehensive look at the 16 companies' traditional businesses, they have basically achieved break-even. The combined gambling performance of the three companies, NetXin Electric, NetXin Information, and Netcom Enpu in 16-17, was around 81 million and 103 million, respectively. Huatong Cloud Data, which was acquired in '16, was consolidated in '17, and the promised performance for 17-18 was 1.58 million and 198 million respectively. Taken together, the company's 16-year performance is basically in line with expectations. In the next few years, the combined business guarantees high growth in the company's performance. Technological innovation and resource integration and collaborative development are expected to help accelerate the company's performance growth. Acquire Huatong Cloud Data to lay out comprehensive cloud computing services. The company acquired Huatong Cloud Data at the end of 2016. The company's business mainly includes: 1. IDC business. As of October 2016, Huatong Cloud Data has 5 data centers in the Yangtze River Delta region, with a total area of more than 40,000 square meters. It is an important partner of Alibaba. In the future, with the explosive growth of Alibaba Cloud's business and the rapid development of the Internet industry in Hangzhou, the company's IDC business is expected to continue to grow rapidly. 2. Internet resource acceleration services. Huatong Cloud Data relies on its own data center hosting services and has introduced many Internet content providers. To achieve secondary monetization for customers, 3 cloud computing services, Huatong Cloud Data is the first in the country to provide exclusive cloud services for government affairs based on security. It is a provider of exclusive cloud services for the Zhejiang Provincial Government, Hangzhou Municipal Government, and Lishui Municipal Government. We believe that the future will benefit from the resonance effects of three factors, such as the explosive growth of Alibaba Cloud, the continued promotion of cloud-based government systems in Zhejiang Province, and the rapid development of the Internet industry in Hangzhou. The performance of Huatong Cloud Data is expected to continue to exceed expectations in the next few years. Cloud computing and big data set the stage, and artificial intelligence plays the role. The company's future strategy is to build a leading domestic artificial intelligence ecosystem by integrating academic and industrial resources with artificial intelligence technology as the core, cloud computing and data from the three major industries (transportation, medical care and finance). Companies in the field of artificial intelligence technology and research are backed by Zhejiang University and can utilize excellent domestic artificial intelligence research teams at a lower cost to ensure the company's continued leadership in artificial intelligence source technology. In terms of industry incubation and integration, the company has comprehensive deployment from artificial intelligence industry incubation to merger and acquisition funds to ensure the breadth and depth of the company's future resource integration. The company has built a support platform through cloud computing and industry data. The three major industries are application scenarios, integrating resources to build an artificial intelligence ecosystem, and there is great room for future development prospects. Investment recommendations We expect the company's EPS to be 0.30/0.48 yuan/0.63 yuan in 2016/2017/2018, respectively, and the corresponding PE is 40/25/19 times, respectively. Considering that the company will continue to integrate resources to focus on the three major advantageous industries in the future, and at the same time closely follow the development wave of cloud computing and AI technology to support the company's industrial upgrading, the company was given a “buy” rating. Risks suggest that M&A companies' performance falls short of expectations; financial and healthcare business expansion is blocked; and AI technology research and development falls short of expectations.