The performance of the main business is superior to that of the industry, and business optimization has led to an increase in performance. In 2014 Q1-3, Guangbai Co., Ltd. achieved revenue of 5.44 billion dollars, a year-on-year decrease of 3.90%, and Q3 revenue a year-on-year decrease of 6.17%; Q1-3 achieved net profit attributable to shareholders of the parent company of 164 million, an increase of 8.72% year-on-year, and a 1.56% year-on-year increase in net profit after deducting non-net profit. The company's operations were clearly superior to the industry in the context of closing 3 stores in the same period in '13 and a weak retail industry. 1) Q3 gross margin increased 0.30pp to 20.63% year on year, narrowing the Q1-3 gross margin decline to 0.61 pp to 19.04%, gradually offsetting the gross margin impact after the transformation of GBF's Beijing Road store into a gold and jewelry building; 2) The Q3 sales management expense ratio increased slightly by 0.15 pp year on year, but the Q1-3 sales management expense ratio still fell 0.57 pp to 14.31% year on year. 3) Q3 microfinance and financial management earnings reached $13 million, which will continue to contribute additional performance growth to the company; 4) Affected by the stability of the main business and the increase in new business, the company's Q1-3 net interest rate increased 0.35pP to 3.02% year on year, and Q3 net profit increased 12.10% year on year. Business outlook: State-owned enterprise reform boosts the company's new round of development. The company's stores are expected to pick up relatively quickly as they actively adjust and transform into shopping centers and community retail formats. In the second half of the year, the company's maturing wealth management products earned nearly 10 million yuan, and it is estimated that there is still room for growth in the earnings of microfinance companies. As the vanguard of Guangdong state-owned enterprises in reforming trade and retail, Guangbai Group, the majority shareholder of Guangbai Co., Ltd., has more than 10 billion property resources and corresponding advantageous operation teams in the fields of commerce, exhibition, and logistics. Judging from the ideas of state-owned securitization, asset restructuring, and expansion and strengthening of local state-owned enterprises in Guangdong Province, it is likely that the high-quality assets of unlisted companies under Guangbai Group will continue to be injected into Guangbai shares to enrich Guangbai's main business and optimize resource allocation, which will greatly enhance the competitiveness and profitability of Guangbai Shares. The reform of state-owned enterprises will be an additional impetus to help promote the development of 100 shares for some time to come. Profit forecasts and investment advice. As a leading retail retailer in Guangdong, in the face of an increasingly severe competitive environment, the company actively adjusted its store opening strategy, refocused on the dominant market in Guangdong Province, and at the same time actively expanded microfinance and transitioned to mobile internet, improving its profitability in 2013. However, since the company will mainly tap potential within stores in the next two years, the company's revenue and net profit growth is expected to be steady. The company is our first target for the reform of state-owned enterprises in Guangdong. Riding on the trend of state-owned enterprise reform in Guangdong, the company is expected to receive high-quality asset injections from the parent company, and its competitiveness and profitability will be enhanced. EPS in 14-16 was raised by 0.72, 0.78, and 0.84 yuan. As the core target of retail state-owned enterprise reform, it was given 18XPE in '14, with a reasonable value of 13 yuan, maintaining a “prudent increase in holdings” rating. Risk warning: Terminal retail sales have weakened sharply, and the progress of state-owned enterprise reform has fallen short of expectations.