14Q1 revenue declined due to a relatively high base, and profit growth was steady. The company achieved revenue of 2,030 billion yuan in 14Q1, a year-on-year decrease of 2.47%, mainly due to the closure of the Chengdu store and the Wuhan store in February and June '13, respectively, which are relatively high; it is expected that the overall store will still achieve slight growth. Net profit attributable to the parent company was 68 million yuan, an increase of 3.00% year on year; net profit after deducting non-net profit increased by 6.10% year on year, which is basically in line with expectations. (1) The gross margin decreased by 0.54 pp to 19.15% year on year, mainly due to changes in the gross margin structure due to the opening of gold and silver jewelry stores and the intensification of competition in local department stores in Guangdong. It is expected that gross margin will continue to be under pressure; (2) the sales and management expenses ratio decreased by 0.59pp to 13.39%, mainly due to the closure of the Chengdu and Wuhan stores; (3) The year-on-year contribution of financial expenses and investment income increased by 14 million, mainly due to the increase in income and interest income of small loan companies, and the increase in financial management revenue; (4) The decline in the fee ratio exceeds gross margin and financial expenses; (4) The decline in the cost ratio exceeds gross margin and financial expenses. The increase in investment income contribution increased the net interest rate by 0.23pp to 3.24%. 14-year outlook: Expanding and strengthening the state-owned assets platform under Guangdong's state-owned enterprise reform is the biggest highlight Guangdong is almost the most active province in the state-owned enterprise reform. The competitive sector state-owned enterprise reform in Guangdong Province is mentioned in terms of shifting to capital management and liberalizing the two main lines of competitive industries, transfer of controlling rights, asset restructuring, and equity incentives. It also provides clear indicators for securitization of state-owned assets, asset restructuring, and expanding and strengthening local state-owned assets. As a major state-owned commercial group focused on development in Guangdong Province, Guangbai Group has over 10 billion property resources and an excellent corresponding operation team in the commercial, exhibition and logistics industries. Judging from Guangdong Province's idea of state-owned securitization, asset restructuring, and expanding and strengthening local state-owned enterprises, it is likely that high-quality assets from unlisted companies under the Guangbai Group will continue to be injected into Guangbai shares to enrich Guangbai's main business and optimize overall resource allocation, which will greatly enhance the competitiveness and profitability of Guangbai shares. Profit forecasting and investment advice The company, as a leading retailer in Guangdong Province, has faced an increasingly severe competitive environment in recent years. In recent years, the company has actively adjusted its store opening strategy, re-focused on advantageous markets in Guangdong Province, while actively expanding microfinance and transforming to mobile internet. Profitability has improved in 2013. However, since the company mainly explores potential within stores in the next two years, the company's revenue and net profit are expected to grow steadily. The company is our first bid for state-owned enterprise reform in Guangdong. Taking advantage of the Guangdong state-owned enterprise reform style, the company is expected to receive high-quality asset injections from the parent company, and its competitiveness and profitability will be enhanced. Maintain the company's 14-16 EPS forecast of 0.70, 0.76, and 0.82 yuan, and give it a “cautious increase” rating. Risk warning: State-owned enterprise reforms fell short of expectations, and sales declined sharply.