Matters: According to the company's public account, on January 9, the company and Huawei jointly announced the launch of the “Pengxiao” server based on the Kunpeng processor, which will be used for the first time on the Ningbo Municipal Affairs Cloud. Comment: Jointly launched the “Pengxiao” server with Huawei to jointly build the Kunpeng ecosystem. According to the company's announcement, the “Pengxiao” server is equipped with a Huawei Kunpeng chip and motherboard, and Donghua provides software and integrated technology. It is now compatible with all hardware and software devices such as operating systems, databases, middleware, scanners, printers, etc. The company's core application has already been physically tested in Kunpeng. In the future, it will be based on the layout in various fields such as medical care, finance, and smart cities, etc., to achieve large-scale commercial applications of the “Pengxiao” server in the industries covered by the company through the use of various advantages such as technology and markets. Tencent transfers shares, and cooperation between the two sides is expected to be further strengthened. The company signed a “Share Transfer Agreement” with Tencent on January 9. Jianshui Tongxin, Xue Xiangdong, and Guo Yumei plan to transfer their combined 157 million shares of Donghua Software (5.04% of the company's total share capital) to Tencent Technology in a 1.44 billion yuan agreement. At the same time, Tencent will simultaneously withdraw from Donghua Honesty. The shareholding transaction was completed, and the core partnership between the company and Tencent was once again clarified. The two sides will focus on the digital transformation needs of traditional industries, focus on core application scenarios in healthcare, government, finance, energy and other industries, and focus on continuing more in-depth cooperation in medical cloud and medical Internet applications, smart cities and industry SaaS products, energy Internet of Things, and financial big data. Goodwill risks have initially been released, and it is expected that they will go to battle lightly in 2020. According to the company's performance forecast, in 2019, the company expects to achieve net profit of 600 million to 700 million yuan, a year-on-year decrease of 13%-26%. The estimated reserve amount for goodwill impairment is estimated to be 3-4 billion yuan. It can be seen that the company's actual net profit is about 9-1.1 billion yuan. We judge that the probability of impairment of goodwill is that of the three subsidiaries of Supreme Communications, Verida, and Wanxing Software. After this impairment calculation, the company is expected to go into battle lightly in 2020. Investment advice: As a core partner of Huawei and Tencent, the company benefits from the rapid establishment of national ecosystems in various industries, and is expected to achieve rapid development in the next few years. We forecast that the company's net profit in 2019-2021 will be 646 million yuan, 1,344 million yuan, and 1,637 billion yuan, corresponding to PE 70 times, 33 times, and 27 times. Referring to the valuations of comparable companies such as China Software, Taiji Shares, and Shenzhou Information, etc., the company was given a comprehensive PE of 45 times that of 2020, with a corresponding target price of 19.42 yuan. For the first time, coverage was given a “push” rating. Risk warning: risk of impairment of goodwill; intense competition in the server business; integrated business falls short of expectations