The results for the first half of 2018 are in line with expectations, and Dashi Intelligence announced the results for the first half of 2018: operating income of 1.04 billion yuan, down 9.7% year on year; net profit to mother was 97 million yuan, down 6.7% year on year, and profit per share was 0.05 yuan; the results were in line with expectations. The company expects 1-9M18 net profit to be -10-20% year-on-year change. The company's revenue fell 9.7% year on year in the first half of 2018, mainly due to the increase in the company's long-term orders and delays in order delivery, while overall gross margin increased 4.7ppt to 31.4% year over year. Among them, smart buildings, smart healthcare, and smart transportation revenue changed -10/-28/ 88% year on year, and gross margin increased 5/3/15ppt respectively, and smart transportation became the main driver of gross profit growth. The total rate of the three expenses increased by 3.4 ppt to 18.5% year on year in the first half of the year, mainly due to an increase in personnel wages and an increase in interest expenses on bank loans; non-operating income decreased by 36% year on year, mainly due to a decrease in government subsidies received; income tax expenses increased 19.8% year over year, mainly due to changes in the share of profits of subsidiaries applying different tax rates; and the company as a whole achieved a net interest rate of 9.3%, an increase of 0.3 ppt year over year. In the first half of 2018, the company's net operating cash outflow was 410 million yuan, an increase of 260.2% over the previous year, mainly due to the fact that the installment collection project with a large contract amount was still in the implementation stage; the net investment cash outflow was 270 million yuan (net inflow of 6.67 million yuan in the same period last year), mainly due to the increase in payments for Dashi's building renovation and expansion projects and PPP investment project expenses. The development trend focuses on smart medical care, and new orders are strong. The company's new signings in the first half of the year increased 83% year over year, with smart medical order amount increasing 98% year over year. In the first half of the year, the company signed the 190 million yuan Meishan Traditional Chinese Medicine Hospital project, which is equivalent to 21% of smart medical revenue in 2017. Smart transportation and smart buildings are progressing steadily. In the first half of the year, the company reached strategic cooperation with Tencent and Tenpay to upgrade the original automatic ticket sales and inspection system, help the Shenzhen Metro scan the code, and build the COFCO Land Plaza project to provide multi-dimensional services for investment, construction, and operation. Smart transportation and smart construction increased smoothly every month. Profit forecast Due to delays in order delivery, we lowered our net profit forecast for 2018 by 34% to 320 million yuan; at the same time, we introduced a net profit forecast of 430 million yuan for 2019. The valuation and proposed company's current stock price corresponds to 22.2/16.5 times 2018/19e P/E. The “recommended” rating was maintained, but due to the reduction in profit forecasts, the target price was lowered by 40.8% to 4.5 yuan, corresponding to 26.9/20.0 times 2018/19e P/E, with 21.3% room compared to the current stock price. The risky smart construction business declined sharply, and progress in smart medical care and smart transportation fell short of expectations.