I. Overview of the incident. The company released its 2016 three-quarter report and achieved operating income of 5.03 billion yuan from January to September, an increase of 1.69% over the previous year; net profit of 212 million yuan, an increase of 315.40% over the previous year; net profit after deducting 12 million yuan, an increase of 109.09% over the previous year; and earnings per share of 0.32 yuan. 2. Analysis and judgment. Performance has improved dramatically, and transformation and upgrading have continued to be promoted. The main reasons for the rapid increase in the company's performance include: 1) it stepped up efforts to close stores with serious losses in 2015, and the number of loss-making stores in the first three quarters decreased year-on-year; 2) the acquisition of e-commerce companies such as Jiuaizhihe has been included in the scope of mergers since 2016, bringing additional profits; 3) its supermarkets have continued to integrate the supply chain, increasing their ability to attract customers, enhance product competitiveness, and expand sales; 4) Transfer of 19.50% of the shares held in Changsha Zhongpan Company, and investment income increased by 189 million yuan over the same period last year. We believe that in the future, the company may step up efforts to expand the community lifestyle supermarket business format, continue to shift from large-scale expansion to profitable growth, and accelerate business transformation and upgrading. Deeply cultivate e-commerce agency operations, and develop collaboratively online and offline. In January, the company completed the wholly-owned acquisition of three companies, Jiuai Zhihe, Jiuai Tianjin, and Luzhou Zhihe. The three companies have gradually formed strong competitive advantages and profitability from providing e-commerce operation services to Internet omni-channel sales and then expanding to Internet omni-channel sales of customized products. In the future, they are expected to further enrich product lines and service categories, develop more new customers, help the company expand the scale of online sales and brand influence, and achieve collaborative development of online and offline business. Strengthen the sports sector and cultivate new profit growth points. The company has deepened its layout in the sports sector and is committed to promoting the “new fashion of national fitness”. Inter Sports, a wholly-owned subsidiary, has gradually leveraged its brand channel advantages and actively participated in sports event marketing, effectively enhancing its brand image. We believe that benefiting from the country's support for the sports industry and the growing public awareness of fitness, the company's sports business is expected to usher in greater development opportunities and become a new profit growth point. 3. Profit forecasts and investment suggestions. The company's performance has improved markedly, and it continues to deepen its layout in the e-commerce agency operation field. In the future, it may step up efforts to expand sports business and cultivate new profit growth points. The 2016-2018 EPS is expected to be 0.36/0.36/0.45 yuan, and the corresponding PE is 31/31/25 times, maintaining the “highly recommended” rating. 4. Risk warning. The performance of e-commerce agency operations fell short of expectations, and sports business development fell short of expectations.