Key investment events: The company announced that it achieved revenue of 461 million yuan in the first quarter of 2018, an increase of 38.39% over the previous year, net profit of 213 million yuan, a year-on-year decrease of 123.51%, net profit after deduction of 4 million yuan, a year-on-year decrease of 146.08%; the board of directors deliberated and passed the “bill on cleaning up travel agency business”, etc. Comment: New intelligence continues to perform well, and the travel business lost money during the off-season. During the reporting period, the company's revenue surged by 38.39%. It is estimated that the first quarter of the tourism business was in a low season, and the Beiqiong and Beiqiong routes were affected by weather factors; on the profit side, Xinzhijiao's net profit for the first quarter was 217.953 million yuan, a sharp increase of 55.41% over the previous year, and the tourism business's net profit was 24.9233 million yuan. The main reason is that some of the scenic area businesses that were newly expanded in '17 were in the off-season and projects were still in the cultivation period, and profitability was weak. The increase in the share of new smart business led to a decline in gross margin, and there were increases and decreases in expenses. The sharp increase in revenue for Xinzhi led to a decline in gross margin of -5.99 pts. In 2017, the gross margin of the travel business was 35.09%, and the gross margin of the travel business was 45.39%; in terms of expenses, expenses increased by 31.1786 million yuan, management expenses increased 1.77 points, and short-term loans increased by 177 million yuan, leading to an increase in financial expenses of 11.8193 million yuan, but sales expenses fell 4.02 pts, driving the overall cost rate down 0.15 pts. Cleaning up the loss-making travel agency business is expected to improve the profitability of the travel business. Affected by adverse factors such as the small scale of its own business, the travel agency business has been in a state of loss for a long time. According to the company's development plan to focus on its own advantageous industries and promote the integration of existing business resources, the company plans to launch a clean-up procedure for the travel agency business involved. As of the end of March 2018, the relevant travel agency business companies had total assets of 52.7925 million yuan, net assets of -32,074 million yuan. The travel agency business achieved revenue of 806.56 million yuan and a loss of 275.621 million yuan in 17 years. According to the company's annual budget data, the above business After the clean-up is completed, it is expected that 2018 will reduce the company's operating income by 107 million yuan, accounting for 3.12% of the estimated total revenue. Cleaning up the travel agency business is expected to improve the profitability of the travel business. Profit forecasting and investment ratings: As the company accelerates its occupation of high-quality scenic spots and routes, the gradual deepening of understanding of the tourism resources industry will achieve results in the development of in-depth tourism products and the extension of the industry chain. The early project investment period temporarily limits short-term performance, and is expected to contribute steady profits after the cultivation period; the technology sector will continue to grow rapidly with its solid technical advantages, controlling shareholder capital, government resource advantages, and continuously growing market demand. Currently, the company's tourism+technology is gradually becoming the controlling shareholder's key investment direction. In the future, it is expected to rely on the controlling shareholders' strong capital and resource strength to achieve rapid growth. Driven by “end+cloud” technology and innovative data, it is shifting from traditional project product integration models (IT) to industry cognitive services (OT). The company's EPS for 18-20 is expected to be 0.94/1.15/1.38 yuan, respectively, and the closing price corresponding to PE on April 27 is 21/18/15 times, maintaining a “prudent increase in holdings” rating. Risk warning: passenger flow growth/new routes/new business development fell short of expectations; Xinzhi understood that new orders fell short of expectations, and M&A progress/transformation fell short of expectations.