Guide to this report: 2017Q1 closed loss-making stores, leading to a decline on the revenue side and a correction in the growth rate on the profit side. The main business is expected to bottom out at an accelerated pace. Companies under the leadership of state-owned assets in Haidian District participated in the establishment of education investment companies, and may promote the integration of education assets within the beneficiary region in the future. Investment points: Investment advice: ry] 2 The closure of loss-making stores in 017Q1 caused a decline on the revenue side and a correction in the growth rate on the profit side. Against the backdrop of a continued weak recovery in middle and high-end consumption, the main industry is expected to accelerate to the bottom. As a state-owned listed company in Haidian District, the company may benefit from the integration of high-quality resources in the region. Maintain the 2017-2019 EPS forecast of 0.23, 0.24 and 0.28 yuan, maintain the target price of 13.5 yuan, and maintain the increase rating. The closing of the Qinghe store led to a decline on the revenue side, but the reduction in losses was beneficial to the improvement on the profit side. The company achieved revenue/net profit of 1.356/038 billion yuan in 2017-Q1, -6.28%/+8.74% over the same period last year, and EPS: 0.07, which is basically in line with expectations. The decline in revenue was mainly due to the closing of the Qinghe store at the beginning of the year, which continued to lose money. However, the closing of the store caused current sales/management expenses to -45.27%/-30.43% year-on-year, thus correcting the profit growth rate. By business, the revenue of the product sales/leasing business was -5.86%/-14.85%, gross margin -0.55/-1.44pct, and comprehensive gross margin -0.85pct. However, due to the loss reduction effect of the Qinghe store closure, the sales/management expenses rate was -1.10/-0.79pct year on year. The reduction in credit card fees caused the financial expenses rate -0.14pct, and the net interest rate was finally +0.37pct. Listed companies directly under Haidian's state-owned assets may benefit from the integration of high-quality resources within the region. Haidian District is rich in quality education resources. As a listed company with the smallest market capitalization and the highest shareholding ratio under the Haidian District State Assets Administration Commission, the company is expected to be favoured by high-quality resources. Under the leadership of state-owned assets, the company has joined hands with Daoqin Investment and others to jointly invest in the establishment of Haitian Education Investment, which is only a prelude. The subsequent integration of education resources within the region is worth looking forward to. The revaluation value of the company's high-quality property assets, financial assets, and sufficient cash exceeds 12 billion yuan. Compared with the current market value premium rate, it has a strong safety cushion. Risk warning: The economic downturn inhibits consumption; the effect of resource integration within the region is lower than expected.