The company announced on December 16 that it signed the “Lanzhou New Area Traditional Chinese Medicine Hospital Construction Project Financing and Construction Contract” and the “Shaanxi Ningchengcheng County Hospital Overall Relocation Project Financing and Construction Contract”. The total project investment was 457 million yuan and 600 million yuan respectively, and the construction period was 24 months and 36 months respectively. Review the company's credit buying model to help achieve a win-win situation between the government and enterprises. The current Lanzhou New Area Traditional Chinese Medicine Hospital construction project is part of the strategic cooperation framework agreement signed between the company and the Lanzhou New Area Management Committee. The construction is divided into two phases: the first phase of the Lanzhou New Area Traditional Chinese Medicine Hospital was built according to three-level standards, and the second phase included rehabilitation and nursing buildings and employee dormitories, etc., with a total investment of 457 million yuan, and project payment according to project progress. Chengcheng County Hospital is the earliest, largest, and most fully functional second-class public hospital built in Chengcheng County. The operating conditions are good. The total investment for its overall relocation project is 600 million yuan, which is paid according to the progress of the project. Both of the above projects are carried out using a financing agency model (that is, a credit purchase model). 70-80% of the project construction capital is raised by the company through the buyer's syndication credit line, while the company's pledge security deposit does not exceed 15% of the total loan amount. While reducing the financial pressure on the government, it also helps the company leverage large medical construction orders with lower capital costs and achieve a win-win situation between the government and the enterprise. The implementation of medical construction projects has accelerated, and the 250 million recovery aid projects have been successfully implemented. The Lanzhou project and the Chengcheng County project signed this time won the bid on August 31 and September 1 of this year, respectively, and the construction contract was signed in less than 3 months. At the same time, our statistics found that the five previously signed projects were all in the construction commencement or pre-construction preparation stage, indicating that the company's execution is strong and the project is progressing rapidly. Furthermore, in order to ensure the smooth implementation of the construction project, the company plans to raise 250 million yuan (total capital raised 840 million) through a non-public stock offering to increase the hospital's overall construction business capital to supplement the company's ongoing five newly signed hospital construction projects: Anlong County People's Hospital, Weinan City No. 2 Hospital in Shaanxi Province, Danfeng County Hospital of Traditional Chinese Medicine, Ningling County People's Hospital, and Ningling County Maternal and Child Health Hospital. Project implementation is expected to accelerate. In 2016, more than 2 billion yuan of contract orders were added (excluding PPP), new cooperation agreements were signed over 6.5 billion yuan, total annual orders exceeded 8.5 billion yuan, company orders are plentiful, and future performance releases can be expected. Up to now, the company has signed 7 contract orders this year (excluding PPP projects), with a total project volume exceeding 2 billion yuan, equivalent to 120% of the operating income in 15 years, and plenty of orders in hand; in addition, the amount of orders signed in the cooperation framework exceeds 6.5 billion yuan, which is expected to be converted into construction contracts and confirmed revenue. Profit forecast and valuation: The company's performance growth for the first three quarters is in line with expectations, so we lowered the company's 16-18 EPS forecast from 0.45, 0.68, and 0.93 yuan to 0.37, 0.57, and 0.80 yuan, corresponding to 53/35/25 times PE. We remain firm in our optimism about the future development of the company. Risk warning: National PPP policy changes; contract execution time and ratio are lower than expected.