Event description: The company released its 2018 annual report on the evening of April 25, 2019. During this period, it achieved operating income of 391 million yuan, an increase of 41.69% over the previous year; net profit of 40 million yuan, an increase of 22.91% over the previous year; and net profit of 35 million yuan, an increase of 33.46% over the previous year. The industry continued to be booming, and large orders continued to break through the reporting period. During the reporting period, the company's various businesses showed a rapid growth trend. Among them, medical scenario applications and medical information system businesses achieved revenue of 16.58 (+70.85%) and 18.29 (+34.59%) billion yuan respectively. We believe that the rapid growth of its related business is mainly due to the continued high prosperity of the medical informatization industry. As a leading enterprise in the field of in-hospital informatization, the company is deeply involved in the local public hospital market and broadens downstream customer resources based on the obvious card position advantage of military hospitals. With the launch of a new round of medical reform, the company will fully enjoy the explosive dividends of the industry. Our breakthrough in large orders can also confirm this. In 2018, the company won bids for a number of informatization transformation and upgrading projects for medical institutions, such as the Jiangxi Maternal and Child Health Hospital (82.09 million), Shaw Hospital (42.5 million) and other medical institutions. Internet medical services may become the company's future incremental point. The company signed a “strategic cooperation agreement” with the Sichuan branch of China Unicom on April 9, 2019, and collaborated in two areas: 1) develop in-hospital information systems for large medical institutions in Sichuan (mainly hospitals above the top three); 2) use the advantages of both parties to collaborate and develop regional medical information platforms in the region, using the “see a doctor first, pay later” project as an opportunity to promote regional population health big data, regional health informatization platforms, and telemedicine information platforms. We believe that as a high-quality enterprise in the field of hospital informatization, the company is deeply tied to Unicom's Sichuan branch with the leading technical advantages of its “Xinjunji-1” system, and has achieved positive technology+channel feedback based on Unicom's unique channel advantages in Sichuan Province. At the same time, after the completion of the regional medical information platform project, the company, as the only medical software provider for the project, is expected to achieve vertical expansion to platform service providers, and future related Internet business expansion will also be one of the biggest incremental points in its performance. Profit forecast and investment recommendations We expect the company's net profit to reach $0.61, 1.11, and 178 million yuan respectively in 2019-2021, with EPS of $0.73, 1.32, and 2.13 yuan respectively, and corresponding PE of 89.4, 49.4, and 30.6 times respectively, maintaining the “increase in holdings” rating. Risk warning: Cooperation falls short of expectations; risk of shareholders' holdings reduction; promotion of Xinjun No. 1 falls short of expectations.