Revenue growth was weak, and net profit increased due to improvements in gross margin and expense ratio, Renren Happy achieved operating income of 9.630 billion in the 1st to 3rd quarter of 2013, a year-on-year decrease of 0.83%. Revenue for the third quarter fell 0.80% year on year, continuing the trend of a slight year-on-year decline in the first and second quarters, reflecting the general background of weak consumption and weak same-store growth under the decline in supermarket business. The company's gross margin for the 1st to 3rd quarter increased by 0.85 percentage points to 20.81%, which is narrower than the first half of the year (0.98 percentage points); the period expense ratio fell 0.64 percentage points to 19.54%, an increase over the first half of the year (0.46 percentage points), reflecting the company's efforts to strengthen operation control and optimize categories. The company also successfully reversed losses in the 3rd quarter and achieved a net profit of 5.63 million. The net profit for the 1st to 3rd quarter was expanded to 15.77 million, making smooth progress in reversing losses. At the same time, the company also expects to reverse losses to a profit of 20 million to 40 million in 2013. We believe that the company's net profit continued to reverse losses by a large extent in the fourth quarter is a definite event. Business outlook: Entering a period of stable and slow development, the company has absorbed the cost pressure of opening a large store against the backdrop of a slowdown in consumption in 2011, and at the same time, gross margin is also gradually picking up as categories and regional adjustments are being strengthened. However, due to the continuous decline in the ability of the hypermarket business to attract customers in recent years due to poor experience, and due to weak consumption, oversupply, rigid cost increases, and e-commerce diversion, we judge that the company will enter a period of stability and growth. Profit forecasts and investment recommendations are affected by the continuous decline in customer attraction capacity, oversupply, and rigid cost increases due to poor customer experience, so there is limited room for future performance growth in the hypermarket business format. We judge that after successfully reversing losses, the company will enter a period of stable and slow development. As the company's revenue for the third quarter continued to remain low, we lowered the 2013-2015 EPS forecast to 0.09, 0.09, and 0.10 yuan to maintain our holding rating. Risks suggest that the growth rate of same-store stores is slowing further, and cost control falls short of expectations.