Performance review The company's 2017 revenue was 2.572 billion yuan (+4.7%), and net profit to mother was 312 million yuan (+13.19%), lower than our previous expectations (3.3 billion yuan/390 million yuan). The company plans to pay a cash dividend of 0.3 yuan (tax included) for every 10 shares. Lower than expected business analysis results indicate business transformation, increased profitability, and improved capital. 1) The company achieved revenue/net profit of 25.72/312 million yuan in 2017, an increase of 4.7%/13.2%, respectively. Along with the transformation of the company's business, the revenue of the smart transportation business fell -72% year on year due to the gathering of more resources to smart healthcare. Even during the painful period of transformation, revenue/performance fell short of expectations. It is expected that after the company's business layout is rationalized in the future, the performance growth center is expected to rise. 2) ① The company's gross margin in 2017 was 32.53% year-on-year +2.04pct, driven by a 16.61 pct increase in revenue share of the high-margin smart healthcare (36%) /smart construction business (28%). ② All three rates increased to varying degrees. Driven by demand for business expansion, the sales rate increased by about 0.9 pct. The overall cost rate increased by 1.18 pct to 16.23% during the period, and asset impairment losses remained basically the same as year on year. ③ Under the upward trend in gross margin, net profit margin increased by 0.93pct to 12.96%, and profitability increased slightly. 3) Accounts receivable were 1.76 billion yuan, an increase of 14.4%, and the number of accounts receivable turnover days increased to 230.58 days (+28 days), but due to the amount of sales payments and acceptance notes due, the collection ratio increased by 10 pcts to 91.86%, and operating cash flow of 210 million yuan improved significantly year-on-year (-15 million in the previous year) to the best level in history. High order growth+three major investments to enhance future performance: 1) The company adheres to the “expand smart healthcare” strategy. The smart medical business revenue in 2017 was 915 million yuan, accounting for a 4.07pct increase of 35.57% in total revenue. It is the second largest business. The total amount of PPP projects such as smart medical was newly signed in 2017 was about 2.27 billion yuan, and the order revenue ratio was 2.5 times higher. 2) The company continues to increase investment in technology and product R&D, reaching 105 million yuan (+14.33%) in 2017. 3) The company uses equity investment, the establishment of industrial funds, and insurance companies to comprehensively improve the smart city industrial chain layout. 4) Relying on its Shenzhen headquarters, the company is deeply involved in the Guangdong-Hong Kong-Macao Greater Bay Area. In April 2017, the company invested in the establishment of a wholly-owned subsidiary of Xiongan Dashi to help the company further explore the Tianjin-Beijing-Hebei and northern markets and open up new boundaries of imagination. The investment proposal took into account that this year's performance fell short of expectations. We lowered our profit forecast. We forecast that the company's 2018/2019 EPS will be 0.20/0.25 yuan, respectively, and that the company's target price for 6-12 months will be lowered to 6 yuan, corresponding to 2018/2019 PE 30/24 times, respectively. Risk indicates the management risk of innovative business models, and the management risks brought about by the rapid expansion of the company.