The company announced its 2016 annual report. Net profit to mother increased 26.91% year on March 18. On March 18, the company announced its 2016 annual report: achieved annual operating income of 2,441 billion yuan, a year-on-year decrease of 11.85%; realized net profit to mother of 89 million yuan, an increase of 26.91% year-on-year, equivalent to EPS of 0.32 yuan; realized net profit without deduction of 86 million yuan, a year-on-year decrease of 15.36%, and the performance was higher than expected. Looking at the single-quarter split, the company achieved operating income of 636 million yuan in 2016, an increase of 13.55% over the previous year; realized net profit of 57 million yuan to mother, an increase of 49.94% over the previous year. The overall gross margin increased by 0.10 percentage points, and the expense ratio decreased by 2.81 percentage points during the period. Looking at the company's revenue breakdown, the retail/service business achieved revenue of 23.45/ 0.92 billion yuan respectively, a year-on-year decrease of 12.05 %/ 9.15%, respectively, and the advertising business achieved revenue of 4.4822 million yuan. The company's comprehensive gross margin during the reporting period was 19.39%, an increase of 0.10 percentage points over the same period of the previous year. Among them, the gross margin of the retail business was 16.53%, an increase of 0.11 percentage points over the same period last year. The company's expense ratio during the reporting period was 12.63%, down 2.81 percentage points from the same period last year. Among them, the sales/management/finance expense ratios were 1.94%/9.95%/0.74%, respectively, a year-on-year change of -0.19/ -2.68/ 0.07 percentage points. The main reason for the sharp drop in the management fee rate was due to the strengthening of cost control and the return of some paid leavers to work during the current period. The company's property value is outstanding. With state-owned enterprise reform, the company's investment value is: 1) The company's current market value is small, about 4 billion yuan. 2) The company's shares are concentrated. The top four shareholders are Shenyang Zhongxing Commercial Group Co., Ltd. (holding 33.86%), Hangzhou Rushan Venture Capital Co., Ltd. (holding 10.04%), Dashang Group Co., Ltd. (holding 9.97%), and Dashang Investment Management Co., Ltd. (holding 6.95%). 3) The actual controller of the company, the Shenyang Municipal State-owned Assets Administration Commission, failed to transfer the company's shares in the early stages. Under the current situation of weak economic growth and high financial pressure in Liaoning Province, there are expectations for state-owned enterprise reform. Raise the profit forecast and maintain the purchase rating and target price. We adjusted our forecast for the company's 2017-2019 EPS to 0.37/0.43/0.47 yuan (the previous forecast was 0.30/0.31/0.32 yuan). In a situation where the traditional retail industry continues to be sluggish, the company's expenses are properly controlled, and we maintain our purchase rating and a six-month target price of 20 yuan. Risk warning: The growth rate of consumer demand has fallen short of expectations, and major shareholders risk reducing their holdings in the future.