1. Event Overview On the evening of April 18, Yinjiang Co., Ltd. released its 2017 annual report and 2018 quarterly report: 2017 achieved revenue of 1,942 million yuan, a year-on-year increase of 17.3%; net profit of 139 million yuan, a year-on-year decrease of 9.6%; and deducted non-net profit of 80 million yuan, an increase of 1412.1% year-on-year. The first quarter of 2018 achieved revenue of 482 million yuan, an increase of 36.77% over the previous year; net profit of 54 million yuan, an increase of 59.7%; and net profit of 52 million yuan, an increase of 55.9% over the previous year. 2. Analysis and judgment of the annual performance is generally in line with expectations. The high performance in the first quarter achieved a good start, and the 2017 performance was 139 million, which was lower than the performance report (158 million), but fell within the performance forecast range (138-184 million). The main reason is that the company added Hangzhou Yinjiang Smart Industry Venture Capital Partnership (Limited Partnership) (“Industrial Fund”), with a shareholding ratio of 70%, and the impact on net profit after the new merger was about 18.87 million yuan. Market expansion was blocked due to changes in the market environment of Asia Pacific Anxun, which was acquired in 2014. Impaired goodwill in 2016 affected recurring profit and loss of 6.04 million yuan. If this part of the caliber is recovered, the net profit after deducting increased by 22.3%, achieving good growth, and is basically in line with the revenue growth rate. The overall gross margin increased by about 1 percentage point. The company achieved net profit of 52 million yuan in the first quarter, an increase of nearly 60% over the same period, and reached 65% in 2017, laying a solid foundation for annual performance growth. There are sufficient new orders, and the long-term development momentum is good. In 2017, the company's orders increased dramatically. The total number of new orders was 3.23 billion yuan, including 1.35 billion yuan for transportation business, 4.7 billion yuan for medical business, and 1.42 billion yuan for urban business. According to industry regulations, the project cycle is generally 6 to 18 months, so ongoing orders will continue to generate revenue from 2018 to 2019. Growth has continued in the same direction for the past three quarters. Considering that demand is expected to grow steadily, that is, the long-term growth trend is basically clear. At the same time, the company mainly focuses on bidding projects, supplemented by PPP and other project models, and is not greatly affected by relevant policies. Benefiting from the increase in the popularity of Internet+healthcare, it is expected to become an important growth point. The company announced on January 26, 2018 that Hangzhou Yinjiang Medical Network Technology Co., Ltd., a shareholding company of Hangzhou Yinjiang Smart Healthcare Group Co., Ltd., a wholly-owned subsidiary, will be listed on the New Third Board (securities abbreviation: “Medical Network”). The subsidiary holds 30% of the shares in Medical Network and is the second largest shareholder, which has positive significance for both investment and business collaboration. On April 12, **** presided over an executive meeting of the State Council to determine measures for the development of “Internet+Healthcare”. The meeting decided (1) to speed up the general provision of online services such as medical appointments and inquiries of test results in hospitals above level II; (2) promote telemedicine coverage of all medical consortia and county-level hospitals nationwide; (3) explore the sharing of prescriptions and drug retail information in medical institutions, and implement intelligent medical insurance review and “one-stop” settlement. The company's smart medical business will benefit from increased industry prosperity. Considering the relatively small base of the medical business, it is expected to achieve highly flexible growth. Companies that have increased AI investment and improved smart city layout and industrial funds have invested abroad in 3 projects, including Yibang Shares (blockchain field), Wanpeng Education (smart education field), and Yitong Technology (smart medical field). The company, wholly-owned subsidiaries, and industrial funds have already listed 10 participating companies in the national SME share transfer system, and some participating companies are preparing for IPOs. Joining forces with Alibaba Cloud, the Smart Transportation Cerebellum Project is being promoted nationwide. 3. Profit forecast and investment recommendations expect EPS from 2018 to 2020 to be 0.33, 0.41, and 0.49 yuan respectively, and the current stock price corresponding to PE is 37X, 30X, and 25X, respectively. The company is in a leading position in the field of smart cities, has a perfect overall layout, in-hand orders guarantee a high degree of certainty in performance growth, and maintains a “highly recommended” rating. 4. Risks suggest that smart city projects have not progressed as expected; new orders have fallen short of expectations; and investment returns have declined.