At a time when a new round of medical reform with medical insurance payment reform as the main direction begins, the construction of internal informatization in hospitals, such as electronic medical records, has become a key investment direction, promoting the transformation of hospital information systems from HIS to CIS and connectivity, and the demand for hospital informatization transformation is entering a period of accelerated release. The company's electronic medical records and smart hospital products are expected to achieve rapid growth. Incidents: On December 7, the Medical Administration and Hospital Administration Bureau of the Health and Health Commission issued the “Administrative Measures on Level Rating Evaluation of Electronic Medical Record Systems (Trial)” and the “Electronic Medical Record System Application Level Rating Evaluation Criteria (Trial)”; on December 20, the National Health Insurance Administration issued the “Notice on Application for National Pilot Group Payments Related to Disease Diagnosis” to promote the application of DRGs in actual health insurance payments. Medical reform policies are being introduced frequently, and the demand for hospital renovation has entered a stage of accelerated release. In recent years, the state has guided and supported the construction of medical informatization through various means, and the prosperity of the medical informatization industry has steadily increased. Currently, there is still a 1-2 level gap between the level of application of electronic medical records in hospitals at various levels and the construction requirements that meet the detailed management of medical insurance. Future department-level applications and hospital-level system upgrades in hospitals will have broad market space. The National Health Insurance Administration's promotion of reform based on DRGs payment methods will also continue to drive the demand for internal informatization upgrades in hospitals. Due to the unique advantages of the CIS in improving the quality of medical technology, the hospital information system will gradually be transformed from HIS to CIS. Under the opportunities brought about by medical reform, the company is expected to use its capital and technological advantages to further expand its market share. Deeply cultivate the field of smart hospitals and consolidate technological innovation and customer resource advantages. The company has been deeply involved in the field of CIS development for many years, and has realized a system that completely records clinical medical behavior with electronic medical records as the core. The company took the lead in proposing overall solutions based on clinical core products, leading the way in the CIS transformation trend. The company has actively established a nationwide customer network, established extensive cooperative relationships with some of the top three hospitals in China, and has a broad business layout in East China and North China. After the company successfully won the bid for the Xijing Hospital project of the Chinese People's Liberation Army Air Force Military Medical University this year, the market in the northwest region also expanded rapidly. At the same time, the company invested 70 million yuan to establish a smart medical company in an effort to develop the regional smart cloud medical market in Henan Province. We judge that the company's future development will focus on the fields of smart hospitals and smart cloud healthcare, which is expected to innovate business models and improve profitability. First “Prudent Recommendation-A” rating: The company's business will enter a period of accelerated development. The estimated net profit for 2018-20 is 0.50/0.79/118 million yuan, and the current price corresponds to 91/58/39 times PE. For the first time, coverage gave a “Prudent Recommendation - A” rating. Risk warning: 1. The prosperity of the medical informatization industry falls short of expectations; 2. The company's business development capabilities fall short of expectations.