Performance Review Company 2018 Q1 had revenue of 378 million yuan (-15.9%) and net profit of 36 million yuan (-11.2%), lower than our previous expectations. The profit level of business analysis and business transformation has improved, and it can be expected that the capital side is good and the performance center will rise. 1) The company achieved revenue/net profit of 378/036 million yuan in 2018Q1, a decrease of 15.9%/11.2%. As strategic resources focus on smart healthcare, the company's revenue/performance fell short of expectations during the period of transformation and pain. The company expects net profit from 2018 H1 to -10% to 20%, and the performance growth center is expected to rise. 2) In the business restructuring, the company's gross margin increased by 8.6pct to 34.94% in 2018Q1; the period expense ratio increased by 25.5% (+8.1pct), and the sales/management/finance rate increased by 4/3.5/0.56pct; asset impairment losses also decreased by 113%, mainly due to the parent company recovering a lot of long-term accounts during the reporting period and recovering from bad debt preparations; net profit margin increased by 0.65pct to 9.7%, with a slight increase in profitability. 3) ① 2018Q1 accounts receivable was 1.72 billion dollars, an increase of 11.6%, and the number of accounts receivable turnover days increased to 414 days (+106 days), but the payout ratio was 110%, and the same minus 1.6 pct remained high. Due to sufficient cash in 2017 and 655 million in cash in hand in Q1 in 2018, an increase of 84.9%, the capital side can still provide strong support for business transformation. ② Net cash flow from operating activities was -257 million, a decrease of 196 million. ③ The subsidiary Dashi Information Payment Building project payment increased by 66 million yuan, and Hongzehu Dashi Payment project payment was 87.45 million yuan, resulting in a net investment cash flow decrease of 1347% to -308 million yuan. The trend of the Internet of Things is becoming more clear, and the smart map continues to expand: 1) In 2017, the Ministry of Industry and Information Technology issued policies such as the “Internet of Things Development Plan” to accelerate the development of core technologies such as 5G and NB-IoT, and promote the application of the Internet of Things in various fields. 2) The company signed a strategic cooperation agreement with Tencent to carry out in-depth cooperation in the field of “smart transportation”. The company will use Tencent's advantages and experience in user coverage and financial payments to enhance competitiveness. 3) The company's resources focus on smart medical care; in 2017, Hongze County and Taojiang County Smart Hospital PPP projects were signed with a contract value of 2.27 billion yuan, demonstrating the company's ability to build service capabilities in the field of smart hospitals. 4) The company maintains good relationships with many real estate agents, and is one of Evergrande's 20 outstanding strategic partners. It signed a contract for the Beijing COFCO Land Plaza energy station project in 2017, pioneering the “IBOS” model and setting a benchmark for efficient cold stations for large central enterprises through “technology+finance”. Investment recommendations We predict that the company's 2018/2019 EPS will be 0.20/0.25 yuan respectively, keeping the target price unchanged at 6 yuan, corresponding to 2018/2019 PE of 30/24 times. Risk indicates the management risk of innovative business models, and the management risk brought about by the rapid expansion of the company.