Revenue declined slightly in 17Q1, and profits grew 37% year over year, stimulated by cost control and a low base. The company is a leading multi-brand underwear company with a national layout. The main brand Manifin has a leading market position and has ranked first in the market share of similar products for 14 consecutive years. The company's brand advantage is an important guarantee for sales growth. At the same time, benefiting from consumption upgrades and increased industry concentration, the steady development trend is expected to continue. Manifin Cosmetics began operating on Tmall last year. Men's underwear brand Joe Baishi is gradually expanding the market. The expansion of underwear product categories and the expansion of the cosmetics field based on female users are expected to open up new development space for the company. The company currently has a total market value of 6.2 billion dollars. The short-term valuation advantage is not obvious, but the company's market capitalization is small. In the medium to long term, the company's leading position is stable, and it has a foundation for steady growth. If there is a pullback in the volatile market, you can pay attention and maintain a “Prudent Recommendation - A” investment rating. 17Q1 revenue fell 3%, and net profit increased 37%. 17Q1 achieved operating income of $524 million, a year-on-year decrease of 3.48%; operating profit and net profit attributable to the parent company were 1.37 billion yuan and 100 million yuan respectively, up 29.43% and 37.76% year-on-year, with basic earnings per share of 0.46 yuan. Revenue was in line with expectations, and profit growth exceeded expectations. In the context of a weak market, the company operated steadily. The retail environment is still sluggish. It is expected that the company's main brand “Manifin” is relatively stable, and the sub-brand, Yves, is positioned as high-end. In a weak market, consumers place more value on cost performance, which may affect Evis' sales growth; Manifin Cosmetics is still in a pioneering period. Currently, the focus is on improving customer experience rather than scale, and is not expected to contribute much to revenue. The gross margin increased and the expense ratio decreased, increasing Q1 net profit. The consolidated gross margin increased by 0.84 PCT to 69.07% year on year in Q1, and the fee rate decreased by 8.7 PCT to 40.64% during the period. Among them, the sales rate increased by 7.45 PCT to 31.35% year over year, the management rate increased by 2.0PCT to 9.47%, and the financial rate decreased by -0.13 PCT to -0.18%, mainly due to the increase in bank deposits and interest income during the reporting period. After optimizing the management system, the company effectively controlled costs and expenses, and increased the flexibility of net profit. Inventories and accounts receivable declined, and operating cash flow was healthy. Inventory in Q1 2017 decreased from 654 million yuan at the end of 2016 to 580 million yuan, a year-on-year decrease of 3%. Accounts receivable in Q1 2017 were $199 million, down 24.03% year over year. In Q1 '17, the company's net operating cash increased by 328% year-on-year to $147 million, mainly due to a decrease in payments for the purchase of raw materials and inventory products and the unpaid year-end bonus in 2016. Profit forecasts and investment ratings. The company is a leading multi-brand underwear company with a national layout. The main brand Manifin has a leading market position and has ranked first in the market share of similar products for 14 consecutive years. The company's brand advantage is an important guarantee for sales growth. At the same time, benefiting from consumption upgrades and increased industry concentration, the steady development trend is expected to continue. Manifin Cosmetics began operating on Tmall last year. Men's underwear brand Joe Baishi is gradually expanding the market. The expansion of underwear product categories and the expansion of the cosmetics field based on female users are expected to open up new development space for the company. Based on the current market situation, EPS is expected to be 0.96, 1.08, and 1.23 yuan respectively in 17-19. Currently, the total market value is 6.2 billion yuan, and PE 30X in '17. The short-term valuation advantage is not obvious, but the company's market capitalization is small. In the medium to long term, the company's leading position is stable, and it has a foundation for steady growth. If there is a pullback in the volatile market, you can pay attention to maintain a “prudent recommendation - A” investment rating. Risk warning: Terminal retail sales fell short of expectations, sub-brand development fell short of expectations, and absorption of new production capacity fell short of expectations.