The company's performance is in line with expectations. The company achieved revenue of 7.8 billion in 14 years, an increase of 8.6% over the same period last year, a net profit of 440 million, an increase of 15.4% over the same period last year, and a net profit of 370 million, an increase of 1.4% over the same period last year. Of this total, 14Q4 achieved operating income of 2 billion, an increase of 7.3% over the same period last year, and a net profit of 120 million, a decrease of 0.95% over the same period last year. At the same time, it is announced that every 10 shares will be increased by 15 shares and a cash dividend of 3.6 yuan (including tax) will be paid at the same time.

The steady growth of business is better than that of its peers. The company's revenue for the current period was 7.8 billion, up 8.6% from the same period last year, of which department store revenue was 4.69 billion, up 6.6% from the same period last year; supermarket revenue was 800 million, down 4.3% from the same period last year; and electrical revenue was 1.52 billion, down 6.8% from the same period last year. The consumer market is in the doldrums, experiential operation (the introduction of cinema, entertainment, catering and other experiential formats) and brand adjustment contribute to the steady growth of department stores. During the reporting period, 3 new supermarkets (Lianyungang Xigou shop, city square shop and Rugao Baipu shop) were opened, and extension expansion contributed to the steady growth of supermarkets; due to the impact of the rise in property rents due, 6 electrical stores were closed, resulting in a decline in sales.

Gross profit margin improved, expenses slightly increased, and net profit increased by 15.4%. First, the gross profit margin has risen steadily. The gross profit margin for the current period was 19.69%, an increase of 2.1% over the same period last year, of which department stores increased by 0.12% year-on-year to 17.55%, supermarkets increased by 0.06% to 10.62%, and electrical appliances increased by 2.3% to 11.73%. The company takes "reducing costs, controlling expenses and focusing on key points" as the main line, shutting down 6 low-margin electrical stores, upgrading superior department stores, reducing unnecessary sales promotion, and raising comprehensive gross profit margin; second, the increase in expenses during the period caused by rising rent and labor costs. Among them, the rate of sales expenses was 5.9%, an increase of 0.6% over the same period last year, and the amount of expenses increased by 80 million, mainly from depreciation, leasing, labor costs, water and electricity repairs and advertising promotion, while the rate of management expenses was 3.8%, an increase of 0.3% over the same period last year, and an increase of 50 million, mainly from labor costs, advertising promotion, warehousing and cleaning. The financial expense rate was 0.3%, an increase of 0.1% over the same period last year, and the amount of expenses increased by 16 million, mainly due to an increase in interest expenses caused by an increase in loans by 8.72 million, while interest income for the current period decreased by 7.94 million over the same period last year.

Rich reserve projects + transformation expectations promote the growth of the company's market capitalization. The company is the retail leader in Nantong, with 14 Wenfeng Great World, 6 Wenfeng Qianjiahui large stores and 21 Wenfeng Electric stores by the end of 14 years. Haimen Xinwenfeng (82,000ping), Qidong Xinwenfeng (55000), Shanghai Huanjiang Road Shopping Center (71800) and Shanghai Songjiang Road Shopping Mall will open in 15 years. During the reporting period, "fall in love with Wenfeng" went online, actively tried to sell online, carried out the double combination pattern of "e-commerce + physical store", and made every effort to create a local three-dimensional O2O platform. The company's current important focus lies in the expectation of future transformation. Wenfeng Group will transfer 220 million shares to Zexi investment, introduce war investment to cultivate emerging industries, and may transform to the Internet industry in the future, which is worth paying attention to.

For the first time, it was given a "overweight-A" rating. In the future, the company will be based on "central Jiangsu and northern Jiangsu, integrated into southern Jiangsu and Shanghai", continue to innovate and improve, and create a new shopping center that integrates shopping, leisure and customer experience. at the same time, the transformation of the Internet will further open the space for market capitalization. We estimate that the EPS of the company from 2015 to 2017 will be 0.69,0.77 and 0.83 yuan respectively, and the corresponding share price PE will be 18 times, 16 times and 15 times respectively.

Risk hint: the macroeconomic downturn brings operational uncertainty.