The company announced its 2017 quarterly report. Net profit increased 8.74% year on year on year on the evening of April 28. The company announced its 2017 quarterly report. 1Q2017 achieved operating income of 1.356 billion yuan, a year-on-year decrease of 6.28% over the previous year, a decline greater than the 4.20% decline in 4Q2016. Net profit of 38 million yuan was realized, which was converted to a fully diluted EPS of 0.07 yuan, an increase of 8.74% over the previous year, while net profit for 4Q2016 decreased by 24.49%. Net profit after deducting non-return to the mother was 40 million yuan, an increase of 23.98% over the previous year. Performance exceeded expectations. Non-operating expenses in 1Q2017 were 3,5884 million yuan, an increase of 1013.24% over the previous year. The main reason was the closure of the Qinghe store to pay rental cancellation compensation. The comprehensive gross margin decreased by 0.85 percentage points, and the period fee rate decreased by 2.02 percentage points. On January 3, 2017, the Qinghe store leasing contract was terminated and operations were terminated. After this change, the number of department stores of the company was seven, with a total construction area of 402,600 square meters, including 194,000 square meters of owned property and 208,600 square meters of leased property, accounting for 48.19% of its own property. By business format, the revenue of the company's product sales/leasing business in 1Q2017 was 1,300/028 million yuan respectively, a year-on-year decrease of 5.86%/14.85%, respectively. The company's consolidated gross margin in 1Q2017 was 19.37%, down 0.85 percentage points from the same period last year. By business format, the gross margin of the company's product sales/leasing business in 1Q2017 was 17.55%/42.56% respectively, down 0.55/1.44 percentage points from the same period last year. The company's expenses rate for the 1Q2017 period was 14.22%, down 2.02 percentage points from the same period last year. Among them, the sales/management/finance expense ratio was 11.09%/3.03%/0.10%, respectively, down 1.10/0.79/0.14 percentage points from the same period last year. High-end consumption is still weak. Companies with heavy short-term performance under pressure have continued to push ahead with the transformation and adjustment of stores in recent years. Longde stores have switched to community living centers, Cuiweidian supermarkets have switched to themed food halls, and stores such as Cuiwei and Contemporary Mall have introduced catering and entertainment services, which is conducive to the recovery of performance. The company's business is still mainly retail. Since the company's stores, Contemporary Mall and Ganjiakou Tower, are positioned as middle and high-end department stores, performance is under heavy pressure due to weak consumption. Furthermore, the company is trying to promote the integration of consumption of goods and services, and to expand into service consumption fields such as education and tourism through investment. In July 2016, the company signed a “Cooperative Education Agreement” with Beijing Haiqu State-owned Assets Investment and Management Co., Ltd. and Beijing Daoqin Investment Management Co., Ltd. to jointly invest in the establishment of Beijing Haidian International Education Investment Co., Ltd., with a shareholding ratio of 15%, which is conducive to revitalizing the company's capital. Given the slow progress of state-owned enterprise reform in Beijing, we think it is very unlikely that the company will completely transform the education industry. The profit forecast was raised to maintain the six-month target price of 10.5 yuan, and the increase in holdings rating. We raised our forecast for the company's fully diluted EPS in 2017-2019 to 0.23/0.24/0.25 yuan (previously 0.22/0.22/0.22 yuan), respectively. Many of the company's stores are positioned as high-end department stores, and performance is under heavy pressure due to weak consumption. Maintain the company's target price of 10.5 yuan for the next six months and maintain an increase in holdings rating. Risks suggest that the macroeconomic growth rate has not met expectations, and that middle and high-end consumer demand has fallen short of expectations.