Q3 is now operating at an inflection point, with revenue up 8.69% over the same period last year, and net profit after deducting non-return increased by 52.5% compared with the same period last year. From January to September, the revenue was 5.409 billion yuan, down 0.57% from the same period last year; the net profit was 166 million yuan, up 1.08% from the same period last year; and the net profit after deducting non-return was 149 million yuan, up 5.16% from the same period last year. EPS is 0.49 yuan. Of this total, 15Q3 revenue was 1.634 billion yuan, up 8.69% from the same period last year (15Q1 and 15Q2 increased by-4.39% and-3.80%, respectively); net profit from home was 41.6965 million yuan, down 8.21% from the same period last year (15Q1 and 15Q2 increased by + 7.04% and + 1.43%, respectively). The net profit after deducting non-return was 44.4611 million yuan, up 52.5% from the same period last year (15Q1 and 15Q2 increased by-12.66% and + 1.32%, respectively). The company increases revenue and reduces expenditure, improves operation quality, and shows an upward trend in the third quarter. It is expected that the annual return net profit will increase by 0-20% compared with the same period last year. At the same time, the company announced to subscribe for Guangzhou State-owned Industry Phase II Equity Investment Fund with its own capital of 100 million yuan (total size 601 million yuan, equity accounted for 16.64%), trying to obtain reasonable investment income through diversified investment.

The gross profit margin increased, the cost control was reasonable, and the net profit margin increased by 0.05 percentage points. From January to September, the company's gross profit margin was 19.18%, an increase of 0.14 percentage points over the same period last year. During the period, the expense rate was 14.34%, a year-on-year decrease of 0.06%, of which the sales expense rate was 12.58%, a decrease of 0.17% over the same period last year; the management expense rate was 1.39%, a decrease of 0.17% over the same period last year; and the financial expense rate was 0.36%, an increase of 0.28% over the same period last year, mainly due to the decrease in interest income. In the first three quarters of 15 years, the net interest rate was 3.07%, an increase of 0.05 percentage points over the same period last year.

Experiential consumption promotes the development of the main industry, promotes the process of diversification of financial business, and pays attention to the expectations of the reform of state-owned enterprises. First, the integration of non-shopping elements to promote offline consumption, pilot cross-border e-commerce to seize the development opportunity. The company creates "R & D Paradise" children's amusement project, which integrates amusement toys, art early education, family parent-child activities, enriches non-shopping elements in offline stores, enhances shopping experience, and promotes store sales and customer flow. In May 15, it launched the cross-border purchase channel of Guangbaihui, and opened experience stores in its Guangbai Gold Jewelry Building, Haizhu Guangbaixin City and Xindaxin Panyu Store. The company has become the largest department store in Guangzhou for cross-border e-commerce on both online and offline platforms. In the future, the offline experience store model will be rolled out in an all-round way to achieve the joint development of offline and online platforms. Second, participate in investment funds to expand financial business and promote diversified development in an orderly manner. The company set up Guangbai Micro-loan Company (25%), participated in China Post Consumer Finance Co., Ltd (3.5%), participated in equity investment fund, and took a number of measures to broaden the business scope of financial investment and enhance the market value of the company. At the same time, take the opportunity to intervene in the new consumer financial platform, broaden the consumer service model, and promote the healthy development and transformation and upgrading of the main industry. Third, benefiting from the promotion of the reform of state-owned enterprises, group assets are expected to be injected into the listing platform. Guangzhou Department Store Enterprise Group is the controlling shareholder of the company. in addition to retail assets, it also has assets such as transportation, warehousing, real estate and property leasing. It is possible for excellent assets to be listed as a whole in the future. Making full use of the capital platform to enhance the comprehensive strength will also promote the company's new round of development. At the same time, there is the possibility of implementing management equity incentives to stimulate the improvement of the company's operational efficiency.

Maintain the earnings forecast and maintain the-A rating. Rational layout of the company's business, promote online and offline omni-channel operation, superimposed financial business layout, long-term contribution to performance increment. Backed by Guangbai Group, the major shareholders are rich in resources, the expectation of asset injection is strong, the reform node is approaching, and investment opportunities are gradually highlighted. We estimate that the EPS in 15-17 years will be 0.73,0.78 and 0.84 yuan, and the current stock price corresponding to PE is 21 times, 19 times and 18 times respectively.

Risk tips: offline consumption is in the doldrums, and the reform of state-owned enterprises is not up to expectations.