Key investment events: The company announced that it plans to jointly invest 100 million yuan with Ningbo Hengzhixin to establish a subsidiary, Rihai Smart City. Among them, the company or its subsidiaries and Ningbo Hengzhi's new shareholding ratio is 80% and 20%, respectively. Rapid large-scale development through advantageous cooperation. After completing the “cloud plus end” strategic layout, the company took into account the vertical market characteristics and long-tail effects of the IoT industry. By introducing excellent sales and management resources and making full use of its own technical capabilities, the company's primary goal was to expand the scale of connectivity in important vertical fields. The company and Ningbo Hengzhixin now jointly funded the establishment of Shenzhen Rihai Smart City Technology Co., Ltd. (Rihai Smart City for short), and have clarified future performance targets: operating income for 2019 and 2020 will not be less than RMB 2.6 billion and RMB 3.8 billion respectively, and net profit will not be less than RMB 67 million and 99 million yuan respectively; the assessment results for 2021 will be determined by negotiations between the two parties before December 31, 2019. At the same time, in order to incentivize partners and take into account factors such as market development risks, the company and partners agreed that after the performance commitment period ends, if the assessment performance achievement rate, net profit margin, and receivables payback of Nihai Smart City are satisfied with the agreement between the two parties, the company will acquire all of the shares of Nihon Hai Smart City newly held by Ningbo Hengzhi. The company has adopted an innovative cooperation model this time, which can achieve complementarity between the two sides in technology, solutions, and sales customer resources, and vigorously expand the business of IoT solutions and pan-intelligent terminal products, which will greatly facilitate the company's rapid penetration into important vertical industry fields and continuously enhance the company's industry competitiveness. Nuggets smart cities, and IoT technology helps achieve implementation and empowerment. Smart city construction is the core strategy that drives global urban development. According to statistics from digital city centers, currently, 100% of domestic cities above sub-provincial level and 90% of prefecture-level cities and more than 700 cities (including county-level cities) have proposed or are building smart cities. Various IoT technologies and solutions have become important means of implementing smart cities. They can help the government solve urban diseases, improve the efficiency of resource use, reduce various hidden costs, and cultivate the maturity and growth of IoT chips, sensors, and system integration industries. Relying on its technology reserves and continuous R&D investment, Nikkai Intelligence has formed a series of complete IoT solutions such as smart water, smart transportation, smart environment, and location-based services, and has become an empowering pioneer in smart cities. Recently, the company also cooperated with Ping An Smart City to focus on empowering smart living, smart government, and smart parks related to smart cities. Earnings forecasts and ratings. The company's 2018-2020 EPS is expected to be 0.61 yuan, 0.91 yuan, and 1.35 yuan respectively. They are optimistic about the company's “cloud plus end” strategic layout and the rapid and continuous market expansion potential brought about by multi-party advantageous cooperation, and maintain the “buy” rating. Risk warning: Market development in the IoT segment falls short of expectations, and operators' CAPEX or failure to meet expectations has put pressure on traditional business.