<海虹企业（控股）股份有限公司重大资产出售报告书（草案）>Matters: The company announced on December 1 that the company deliberated and passed the “Proposal on (Revised Draft) and its Summary”. The company has recently completed the change of actual controller and will resume trading on December 4. Our comments on this are as follows: Commentary: Introducing a new 100 billion real controllers of state-owned capital to launch the first round of reverse mixed market reform. According to the company's recent announcement, China State-owned Capital Venture Capital Fund Co., Ltd. (hereafter: Guofeng Investment) will become the company's new actual controller through capital increases for the company's controlling shareholders. Judging from the specific transaction method, Zhonghaiheng, the current controlling shareholder of the company, plans to increase the registered capital by 30,000 yuan. All of the capital increase will be pledged in cash by Guofeng Investment. After the capital increase was completed, Guofeng Investment held 75% of CNOOH's shares and became CNOHAIHENG's controlling shareholder. By controlling Zhonghaiheng, Guofeng Investment Fund achieved indirect control over listed companies and became the indirect controlling shareholder of listed companies. According to the announcement data, after completing the above transaction, the company will resume trading on December 4, and CNOOC can reduce its holdings of the company by 2% in a major manner over the next 5 trading days. If the holdings reduction plan is implemented, the new actual controller will hold 25.74% of the company's control after the change of ownership, and the actual controller will become Guofeng Investment. Referring to the continuous acceleration of mixed reform in 2017, the company's current capital introduction can be compared to reverse mixed reform, becoming the first information software company in the market to transform from a private enterprise to a state-owned enterprise. As for Guofeng Investment, judging from the data disclosed by the company, its registered capital exceeds 100 billion yuan. Its controlling shareholder, China Guoxin, was determined by the State Council in August 2016. The main goal is to promote China's scientific and technological progress and focus on industrial upgrading through market-based and specialized operation of state-owned capital venture capital funds. It is worth noting that in 2017, as the lead investor, it participated in Kuangshi Technology's Series C financing of US$4.6 billion. Restructuring and light duty, gathering PBM's main business as a red flag. Until the company completes the change of actual controller, it is difficult to see improvements in related businesses such as smart health insurance audits, which the company has been operating for many years, and continues to sell internal assets in order to maintain the overall profit of listed companies. Specifically, in 2015-2017, the company's overall revenue scale did not achieve continuous upward rapid growth, but due to huge investment in the business, after deducting infrequent profits and losses, the company's actual losses continued to grow. However, for the PBM business that the company continues to lay out, although it has basically maintained a steady upward growth trend from the revenue side, on the one hand, the revenue scale is still low; on the other hand, the overall profit of the business may not be certain. Looking at the above business difficulties from the top down, we judge that, on the one hand, due to problems at the industry level, demand for value-added services such as health insurance reviews has not exploded in the past few years due to issues such as the fragmentation of health insurance data regions; on the other hand, due to issues such as the sensitivity and security of health insurance data, looking from the bottom up, it is more difficult for the company's private enterprise status to participate deeply in the commercialization analysis of health insurance-related data. As for the latter, after Guofeng Investment fully takes over, we judge that the efficiency of connecting the company with the medical system will improve rapidly, and that a breakthrough in the point-to-point commercialization of the business is worth looking forward to. While the company implemented the change of actual controller, the company passed a restructuring plan for major assets and proposed the divestment of all related businesses unrelated to the PBM business. The assets involved were the sale of 55% of the shares of Guangdong Haihong Pharmaceutical E-Commerce Co., Ltd. and 100% of the shares of Haihong Pharmaceutical Electronic Trading Center Co., Ltd. The counterparty to the transaction was Wang Zhongyong, a natural person, with a transaction amount of 168.0635 million yuan. According to the company announcement, the sale of 55% of Guangdong Haihong's shares is expected to achieve a profit of about 176 million yuan, and the transfer of 100% of the shares in the trading center is expected to achieve a profit of about 82 million yuan. Through business restructuring, the company has achieved the divestment of nearly 300 non-PBM business personnel, and is expected to return about 520 million dollars of capital by the end of April 2018. In addition, according to the company announcement, the company will fully focus on PBM business development at the business level, while in terms of capital operation and integration of industrial resources, the new controller has also clarified the preliminary development plan for 2018. At the operational level, judging from the company announcement, after on-site audits by new actual controllers, the company established health insurance fund review services in 149 co-ordinated regions across the country in 2017, forming an overall solution for refined health insurance management that can be quickly replicated in all co-ordinated regions across the country. This block achieved revenue of nearly 0.2 billion yuan in the first three quarters, and the initial annualized charging capacity of individual cities for commercial contracts has already exceeded millions of yuan. Therefore, we judge that the new actual controller is expected to achieve rapid replication in most cities and implement more commercial applications on this basis. Looking specifically at the business development plan, under the leadership of the state-owned capital background, the company clearly stated that it will launch a charging model for 149 co-ordinated regions from the top down in 2018, and vigorously promote inter-clinic audit services on the basis of medical insurance review services. It is expected that the project will be implemented in 50 co-ordinated regions across the country. We believe that if smart healthcare related operating companies with existing state-owned backgrounds are compared horizontally, the company's initial revenue limit in a single city is expected to gradually rise to 5 million yuan. As for the company's integrated plan of capital operation and industrial capital, according to the announcement, the company will promote non-public offering within the next 12 months, obtain the company's full development capital, continue to develop the health insurance fund review business, and expand the company's market share with the support of Guofeng Investment and China Guoxin. Establish a “health insurance fine management service cloud platform” in all provinces and cities to provide a full range of products and services covering the fine management of medical insurance, achieve a comprehensive health insurance fund management service business model, combine Zhejiang's “Implementation Plan on Further Deepening the Reform of Basic Medical Insurance Payment Methods”, use Jinhua as a pilot project to speed up promotion throughout the province, and use Zhejiang as a model for promotion throughout the country. Furthermore, Guofeng Investment made it clear that in the future, Jinhua plans to pledge additional capital from CNOOH with a total amount of no more than 4196 million yuan to further support the company's development. Therefore, from a comprehensive perspective, we judge that in 2018, the company is expected to achieve many breakthroughs in the implementation of the PBM business model and introduce various forces to promote the development of the medical big data business under conditions where business development is relatively smooth. Entering around 2020, the company's marginal profit growth rate is expected to clearly improve. Risk factors The health-care reform policy fell short of expectations; the refinancing plan fell short of expectations; and government public service procurement fell short of expectations. The investment proposal is the first case of reverse mixed reform in the market. Combined with the actual controller's industrial background, we are optimistic that the company will fully open up charging channels for the medical and health care system in the future and fully commercialize the Chinese version of the smart health insurance fee control model. Regarding the company's profit forecast, we assume that the company will fully achieve major asset restructuring and complete divestment of the non-fee-controlled business by the end of the year. Based on the above assumptions, we lowered the company's EPS forecast for 17-19 to 0.01/0.09/0.06 yuan (original forecast 0.04/0.12/0.17 yuan). Looking at the medium term, the company plans to fully implement business commercialization breakthroughs and capital structure optimization in 2018. Considering the special nature of the health insurance review business and medical big data business, the company's state-owned background information service provider card advantages are visible, and the main business accumulation advantages are clear. It is recommended to continue to pay attention to major shareholders' business breakthroughs and maintain the “increase in holdings” rating.