Investment highlights: The company released its 2016 three-quarter report on October 28. From January to September 2016, the company achieved operating income of 6.095 billion yuan, a year-on-year increase of 37.26%, total profit of 638 million yuan, a year-on-year decrease of 1.24%, imputed net profit of 458 million yuan, a year-on-year decrease of 5.53%, and non-net profit of 337 million yuan, a year-on-year increase of 352.14%. Among them, the third quarter achieved operating income of 2,361 million yuan, a year-on-year increase of 95.50%, total profit of 190 million yuan, a year-on-year decrease of 68.91%, and imputed net profit of 121 million yuan, a year-on-year increase of 67.47%. The company's diluted earnings per share for the first three quarters were $0.27 (of which $0.07 for the third quarter), and operating cash flow per share was $0.07. Brief reviews and investment recommendations. The company achieved revenue of 6.095 billion yuan in the first three quarters, a year-on-year increase of 37.26%, of which revenue in the third quarter increased 95.90% year-on-year, mainly due to the extended contributions of the acquisitions of Renhe Rendong Store, Guanghua Store, and Victoria Group. Victoria's merger in June 2016 led to a sharp increase of 95.5% in revenue in the third quarter. As of September 2016, the company had 38 stores, and in July 2016, the Oriental Times store in the Shenzhen area was closed. According to our estimates, the company's department stores in Chengdu increased by 2%, which is invaluable. The overall growth rate of department stores has declined by 7%-8%, and the supermarket business has declined by nearly 30%. It shows that the company's radiation power outside of the Chengdu region still needs to be strengthened. Accelerating asset injection in the near future, and actively making external acquisitions, and how to become stronger after growing bigger is the direction the company should focus on. Gross margin rose slightly by 0.93 percentage points to 27.80% in the first three quarters, with a sharp increase of 4.12 percentage points year-on-year in the third quarter, also driven by Victoria Department Store, which has a high gross margin. The sales management expense ratio increased by 3.33 percentage points to 13.77% in the first three quarters, mainly due to an increase in the sales expense ratio; financial expenses increased sharply to 160 million yuan (33.61 million yuan in the same period in 2015), and interest-bearing book liabilities of 4.67 billion yuan. High financial expenses clearly eroded performance. In the end, net profit attributable to the first three quarters was 458 million yuan, down 5.53% year on year. The deduction for non-net profit was 337 million yuan, an increase of 352.14% over the previous year, mainly because the current net profit and loss of non-recurring profit and loss of subsidiaries in 2016 was the net profit for 1-2 months of 5 companies in South China, while the deductions for the same period in 2015 were the net profit for January-September in South China. We estimate that excluding investment income and non-operating income, total operating profit for the first three quarters fell 2.45% year-on-year, a sharp decline from 13.18% in the first half of the year, mainly due to the completion of the acquisition of Renhe Chuntian 2 stores and Maoye Department Store. The one-time expenses confirmed in the expenses for the first half of the year were large, and the amount of amortization in a single quarter decreased in the third quarter. Considering the integration of Victoria and the ongoing fixed capital raising to acquire Maoye in Qinhuangdao and Maoye in Chongqing, we believe that there is still considerable pressure on the company's performance in 2017. A judgment on the company. (1) Through 2 years of continuous shareholder asset injection and acquisition, the layout of a national department store has basically been formed. It has great brand advantages in Chengdu, Shenzhen, Inner Mongolia and other regions, and will continue to acquire in the later stages to further improve the network layout; (2) Shareholder resources are strong, and the actual controller Huang Maoru has run the retail industry for many years and has accumulated a deep accumulation. After the overall listing of its commercial assets, the resolution of competition in the industry will gradually show scale effects and management collaboration; (3) The company's senior management holding 2.82% of its shares as the second shareholder is incentivized by internal vitality Guarantee. Profit forecast and target price. The company's 2016-2018 EPS is expected to be 0.32 yuan, 0.34 yuan, and 0.36 yuan respectively. The current stock price of 7.50 yuan corresponding to 2016-2018 PE is 23.4 times, 22.1 times, and 20.8 times, respectively, and is at the industry average level. Considering that the company still has a lot of room for decline through mergers and acquisitions and its own expansion, the formation of a national department store layout is expected to promote valuation increases. The company was given an investment rating of “increased holdings” by 25 times PE in 2016, corresponding to the target price of 8 yuan. Risk and uncertainty: The intense competitive environment of the retail industry in Chengdu; the risk that the speed of offsite acquisition and integrated cultivation will not meet expectations.