The company released its 2014 three-quarter report on the 25th. From January to September 2014, the company achieved operating income of 5.44 billion yuan, a year-on-year decrease of 3.9%, total profit of 213 million yuan, a year-on-year increase of 15.13%, and net profit of 164 million yuan, an increase of 8.72% year-on-year after deducting non-net profit of 142 million yuan, an increase of 1.56%; of these, the third quarter achieved operating income of 1,503 million yuan, a year-on-year increase of 18.9%, and net profit of 45.43 million yuan, a year-on-year increase of 12.1%. The company's diluted earnings per share for the first three quarters were 0.48 yuan (of which 0.13 yuan for the third quarter), return on net assets was 7.22%, and operating cash flow per share was -0.26 yuan. At the same time, the company announced its 2014 performance forecast: the net profit is expected to increase by 0-20% year-on-year, corresponding to 2013 profit of 222 million yuan. The 2014 net profit range is 222 million yuan to 267 million yuan, and the corresponding EPS range is 0.65 yuan to 0.78 yuan. Brief review and investment advice. The company's revenue fell 6.17% in the third quarter, and continued to weaken compared to the 3.01% decline in the first half of the year, indicating that the company still faced a weak consumption situation and competitive pressure during the reporting period. This is also basically in line with the industry's situation in the third quarter. Gross margin increased slightly by 0.3 percentage points year on year to 20.63% in the third quarter, which is better than the situation in the first half of 2014 (gross margin decreased by 0.94 percentage points year on year in the first half of 2014). The cost rate for the third quarter was 17.1%, a slight increase of 0.2 percentage points over the previous year. Among them, the sales management expense ratio increased by 0.15 percentage points, mainly due to a slight increase in employee remuneration, 3.75 million yuan in financial expenses, and a slight increase of 0.05 percentage points in the cost ratio. Gross margin increased slightly by 0.3 percentage points in the third quarter to offset adverse changes in consumer items, and total operating profit fell slightly by 2%. At the same time, due to the company's investment funds, wealth management products, and the acquisition of small loan companies, etc. in the third quarter, it continued to receive profit and loss of 10.91 million yuan in fair value changes. The total of the two was 23.86 million yuan, an increase of 10.68 million yuan over the previous year, an increase of 81%. This led to a year-on-year increase of 18.9% of the company's total profit and 12.1% year-on-year increase in attributable net profit for the third quarter. Looking at the first three quarters, the company's revenue decreased by 3.9% and gross margin decreased by 0.61 percentage points; the marketing and management expenses ratio was 14.31%, down 0.57 percentage points from the previous year; financial expenses were 4.82 million yuan, a year-on-year decrease of 5.37 million yuan, which combined led to a 0.66 percent reduction in the period expenses ratio; at the same time, it received 33.94 million yuan in non-operating income in the first three quarters, an increase of 23.33 million yuan over the previous year, with a growth rate of 220%. In the end, the company's total profit and attributable net profit for the first three quarters increased 15.13% and 8.72% year on year, respectively. Our estimated total operating profit was 18.11 million yuan, up 3.37% year on year, and net profit after deducting non-vested net profit was 141.95 million yuan, up 1.56% year on year. It shows that the company mainly relied on non-recurring profit and loss to contribute to performance in the first three quarters. Judgment of the company. (A) Looking ahead to 2014-15, the company's performance is expected to maintain steady growth of 5-10% as the economic environment stabilizes, company showrooms slow down, and wealth management products, microfinance, etc. contribute to investment returns. (B) The Guangzhou Municipal State-owned Assets Administration Commission holds 54.18% of the company's shares through the Guangbai Group. If Guangzhou's state-owned assets reform breaks through, it is expected that companies in competitive fields will become targets for promotion and achieve performance improvements after optimizing the governance incentive structure. Maintain profit forecasts. The net profit attributable to the company in 2014-2016 is estimated to be 2.37, 2.55 and 277 million yuan, respectively, up 6.6%, 7.8% and 8.7% year-on-year, corresponding to EPS of 0.69, 0.75 and 0.81 yuan. The company's current stock price is 10.47 yuan, corresponding to the 2014-16 PE of 15.1, 14.0, and 12.9 times; the company's current market value is 3.6 billion yuan, which corresponds to our estimated revenue of 8 billion yuan in 2014, and PS is 0.45 times the industry average. The target price for six months was adjusted to 11.7 yuan (corresponding to 0.5 times PS in 2014) to maintain the “gain” rating. Risk and uncertainty. The regional consumption environment is still sluggish, and competitive pressure is increasing; the results of new business expansion and business transformation are below expectations; if the company develops unconventional stores, it will break the match between revenue and expenses, causing greater short-term cost pressure.