Smart transportation lowered its performance, and the effects of smart medical care were revealed on the evening of March 30. The company disclosed its 2017 annual report, achieving revenue of 2.572 billion yuan, an increase of 4.70% over the previous year; achieving net profit of 312 million yuan, an increase of 13.19% over the previous year (increase of 17.25% after deduction), which is lower than our expectations of 414 million yuan. The main reason is that smart transportation revenue fell by 72% and calculated a loss of 9.68 million yuan in Lianxin's goodwill. The net operating cash inflow was 210 million yuan, the highest level in history. The revenue share and profitability of the company's smart healthcare business continued to increase, maintaining a “buy” rating. The smart medical business accelerated its focus, and the proportion of smart buildings increased. The company accelerated its focus on the smart medical business on the basis of continuing to adhere to the parallel three main businesses of smart medical care, smart transportation, and smart construction. It achieved annual smart medical revenue of 915 million yuan, an increase of 18.24% over the previous year; accounting for 35.57% of the company's total revenue, an increase of 4.07pct over 2016. Among them, Jiuxin Healthcare's market share steadily ranked first in the country, achieving annual revenue of 693 million yuan and net profit of 84 million yuan. The company's smart building and energy saving business achieved annual revenue of 1,414 billion yuan, an increase of 35.65% over the previous year, and the revenue share increased by 12.54 pcts to 54.97%. Mainly, the company has established good cooperative relationships with top ten real estate agents such as Evergrande. Affected by factors such as fewer new orders in 2016, smart transportation achieved revenue of 915 million yuan last year, a year-on-year decline of 72.34%. Financial expenses have risen rapidly. In 2017, the company's comprehensive gross margin was 32.53%, an increase of 2.04pct over the previous year, mainly the gross margin of the smart medical business increased by 0.83 pct to 36.03%; the comprehensive net profit margin was 12.96%, an increase of 0.93 pct over the previous year, and the effects of the company's business structure transformation continued to show. The company's expense ratio for the period was 16.23%, up 1.18pct year on year. Among them, the sales expense ratio increased by 0.88pct to 7.86%, and the management expense ratio increased by 0.08pct to 8.19%. Financial expenses ended two consecutive years of net income. The financial expense ratio in 2017 was 0.19%, mainly due to the increase in interest expenses on bank loans of the parent company. In 2017, the company calculated that the holding subsidiary Dashi Lianxin lost 9.68 million yuan in goodwill. The company achieved revenue of 276 million yuan in 2017, an increase of 10.67% over the previous year, and realized net profit of 121 million yuan, a year-on-year decrease of 49.59%. The payout ratio increased dramatically, and Q4 cash flow improved markedly. The company's 17Q1-Q4 net operating cash was -0.61, -0.53, 0.23, and 302 million yuan respectively, which is in line with the characteristics of Q1-Q2 expenses and Q3-Q4 receipts, but 17Q4 reached the best level in the same period in history. We expect that in relation to the improvement in the company's revenue ratio, the company's revenue ratio in 2017 was 91.84%, an increase of 10.74pct over the same period, while the pay-as-you-go ratio increased by only 3.05 pcts over the same period. Affected by increased demand for financing, the company's balance ratio increased by 1.51 pct to 40.17% year on year at the end of 2017. We are optimistic about the improvement of the company's business structure and profit growth. Maintaining the “Buy” rating, the company's cumulative announcement in 2017 won the bid amount of 2.27 billion yuan for smart medical/hospital projects, an increase of 51% over the previous year. We expect that the company's smart healthcare will continue to develop rapidly and is expected to drive profit growth. As the company's smart transportation business progressed slower than expected in '17, we lowered the company's profit forecast for 18-19. We estimated the company's EPS for 2018-20 to be 0.23/0.30/0.38 yuan (the original forecast value for 18-19 was 0.31/0.42 yuan), a CAGR of 33.22%, and a reasonable price range of 6.90-8.05 yuan (corresponding to 30-35 xPE in '18) to maintain a “buy” rating. Risk warning: Smart medical/hospital projects are progressing slowly, rail transit business is falling short of expectations, etc.