The performance was in line with expectations. The company achieved revenue of 230 million yuan in the first three quarters of 2018, up 31.7% year on year; net profit of 0.26 million, up 24.26% year on year; deducted non-net profit of 202 million, up 24.84% year on year. Set up Zhongyuan Heren Smart Medical Co., Ltd. to expand the Henan market. The company recently announced the establishment of a joint venture with Zhongyuan Dayu Capital, Zhonghongxing Technology, and Ding Yunlan to establish a joint venture, Zhongyuan Heren Smart Medical Co., Ltd. Among them, Zhongyuan Dayu Capital is a wholly-owned holding subsidiary of Zhongyuan Asset Management Co., Ltd., and the Henan Provincial Department of Finance is the largest shareholder of Zhongyuan Asset Management Co., Ltd. According to the announcement, this cooperation is an important step for the state-owned assets platform in Henan Province to “introduce wisdom and hesitation” and promote the construction of smart and healthy cities in Henan Province. The joint venture will focus on developing regional smart cloud medical projects in Henan Province, actively promoting the construction and operation of Henan Urban Medical Group and county medical communities; at the same time, developing smart hospital construction projects and other related businesses. Considering the relatively weak level of medical informatization in Henan Province, the joint venture faces broad market opportunities. With big orders, the market expansion has been very effective. Since this year, the company has performed well in expanding large-scale smart medical projects, winning bids for a number of projects worth 10 million yuan, such as Xijing Hospital of the Air Force Military Medical University of the Chinese People's Liberation Army, the Second Affiliated Hospital of Shaanxi University of Traditional Chinese Medicine, Kunming Social Welfare Institute, Chongqing People's Hospital, Guangxi International Zhuang Medical Hospital, Xi'an People's Hospital, and Anshun Maternal and Child Health Hospital. The core competitiveness of the medical information technology industry lies in product strength, and the company's future growth logic lies in the promotion and replication of products from the top down (from high level hospitals to low level hospitals). The large number of customized projects built by the company for top hospitals not only brought in business revenue, but more importantly, considering that the medical informatization needs of top hospitals are often ahead of lower-level hospitals, the company can maximize its product strength through cooperation with top hospitals, and its product concept and development direction are often forward-looking and leading in the times. Through product strength and word-of-mouth effects, the company is expected to export these leading medical informatization solutions to lower-level hospitals in the future, causing a negative impact on medical information technology vendors with weak product capabilities. Investment advice: Considering the company's leading medical information technology product strength in the industry and the boom in the medical information technology industry in the past two years, the company's business is expected to enter a harvest period. EPS is expected to be 0.55 and 0.89 yuan in 2018 and 2019, maintaining an increase in holdings -A rating, and a target price of 50 yuan for 6 months. Risk warning: Hospital informatization expenses have declined; increased competition in the industry has led to a decrease in gross margin.