The revenue growth rate was corrected in 2016, and losses after deducting non-net profit and loss increased. The 17Q1 performance declined again. In 2016, the company achieved operating income of 6.519 billion yuan, an increase of 3.56% over the previous year; net profit of 36.16 million yuan reversed losses from the previous year, with an EPS of 0.01 yuan. Net profit minus 518 million yuan, loss increased 16.31% over 15 years, mainly due to lower gross margin and higher expense ratio; net profit reduced non-net profit and loss was mainly due to the sale of 100% shares issued by Shanghai Enterprise to Kangqiao Industrial (the largest shareholder is Huafu Investment, the company's controlling shareholder) confirmed investment income of 550 million yuan. In terms of revenue by brand, the direct sales revenue of MB brands increased 10% year on year in 2016, and franchise sales still declined; the sales revenue of the adult MC brand increased 24% year on year, and the revenue of the two major children's clothing brands, Moomoo and Mixi, increased 41% year on year. In terms of e-commerce sales, the sales revenue of bonded purchases, the entire network, and Youfan increased by 72% year on year. Revenue fluctuates due to poor terminal sales, and high costs affect profits. 16Q1-17Q1 revenue was +9.56%, +12.66%, +5.48%, -8.02%, and -12.89%, respectively. Net profit increased by +32.38%, +16.47%, -14.80%, +174.47%, and -43.68%, respectively. Revenue has declined again since the fourth quarter, indicating that sales have not yet recovered; expenses have continued to be high, and all quarters except 16Q4 have declined. The sharp increase in net profit in 16Q4 was mainly due to the sale of 100% shares of Shanghai Enterprise Development and confirmed investment income of 550 million yuan. Gross margin has improved in the past two quarters. Expenses, inventory, and accounts receivable are still under pressure. The gross margin side is beginning to improve, and the expense ratio continues to be high. The gross margin for the full year of 2016 fell 0.28PCT to 43.74%, while 16Q4 and 17Q1 increased by 0.99PCT and 6PCT year-on-year respectively. The impact of the expense ratio on profit erosion is still obvious. The expense ratio increased by 2.54 PCT to 44.38% during the 2016 period, and continued to rise 6.57 PCT to 42.33% year on year in 17Q1. Among other financial indicators, pressure on inventories and accounts receivable still exists. The inventory size at the end of 2016 fell slightly by 2% from the beginning of the year, the end of March '17 was down 20.30% from the end of 2016, and the inventory turnover rate from 16Q1 to 17Q1 declined year-on-year; in terms of accounts receivable, the end of '16 increased by 40.89% from the beginning of the year to support franchisees, and the end of March '17 was down 1.95% from the end of 2016. It is expected to remain under pressure against the backdrop of no improvement in franchise-side sales. The fixed increase was terminated, the chairman changed, and the company announced a fixed increase plan for the non-public issuance of bonds of no more than 1.5 billion yuan in July 2015. In 2015.11.21, the fixed increase was adjusted to no less than 5.94 yuan/stock increase of no more than 707 million yuan, raising no more than 4.2 billion yuan, and investing in the construction of an “intelligent manufacturing” industrial supply chain platform (2.5 billion yuan), an O2O multi-brand sales platform (1.2 billion yuan), and an Internet big data cloud platform center (500 million yuan). 2016.12.23 The company announced the termination of non-public offerings based on major changes in the capital market environment, taking into account factors such as the external financing environment and the company's schedule and business needs. 2016.11.22 The company announced that the CEO was changed to Hu Jiajia (the daughter of former chairman and president Zhou Chengjian), and Zhou Chengjian remains the actual controller of the company. 2017.5.5 The company announced that it plans to issue no more than 1.5 billion yuan of corporate bonds with a term of no more than 3 years. The funds raised this time are intended to be used to repay interest-bearing debt and supplement working capital. It is expected that in the context of fixed growth and termination, it will help improve the company's debt structure, broaden financing channels, and meet the company's capital needs. The pressure on performance is still high. We expect the effects of the reform and adjustment to show: 1) The revenue growth rate for the full year of 16 was corrected, but the decline in the single quarter from 16Q4 to 17Q1 shows that the recovery of the company's sales side is still fluctuating. It is expected that the effects of the franchise channel adjustments, which have dragged down performance, will still take time to be reflected. In the context of high expenses, the margin of loss after deducting non-net profit has increased. The net profit side in the future will depend on the effects of improving the company's operating efficiency and observing whether the gross margin and expense ratio develop healthily. 2) The chairman and president will be replaced, and the second generation will succeed. We look forward to the injection of fresh blood and the improvement of business efficiency. 3) Huarui Bank, which holds 15% of the company's shares, began contributing 21.28 million in investment income in 2016. The company expects net profit for the first half of 2017 to 60 million yuan, a slight improvement from net profit of 60.198 million yuan for the same period in 2016. Currently, the pressure on performance is still high, but some data are showing signs of improvement. The revenue side has ended its decline and there has been a recovery, the gross margin side is beginning to improve, and the net profit side needs to observe the ability to control fees and improve efficiency in the future. The 17-19 EPS was adjusted to 0.02/0.03/0.06 yuan to maintain the “neutral” rating. Risk warning: Consumption is weak, and business adjustments in various channels have not progressed as expected.