[Investment Highlights] Event: The company released its 2015 three-quarter report. In January-September, the company achieved operating income of 1,467 billion yuan, an increase of -0.47% over the previous year; during the same period, the company achieved net profit attributable to shareholders of the parent company of 183 million yuan, an increase of 0.97% over the previous year. Among them, the company achieved quarterly revenue of 434 million yuan in the third quarter, an increase of -6.52% over the previous year; during the same period, the company achieved net profit attributable to shareholders of the parent company of 52 million, an increase of -8.25% over the same period. Meanwhile, the company expects net profit attributable to the parent company for the full year of 2015 to be between 232 million and 284 million, an increase of -10% over the previous year. The performance was in line with expectations, and the decline in revenue growth led to an increase in the cost ratio. Gross profit margin: The gross margin of the company in 2015 Q3 was 31.75%, 0.48pct higher than the same period last year, partly because the growth rate of other business revenue (higher gross margin) was higher than that of department store business revenue. Expense ratio: There was a slight increase in the company's various expense rates. Among them, the share of operating taxes and surcharges increased by 0.13 pct to 1.80%, the sales expenses rate increased by 0.18 pct to 4.76%, the management fee rate increased by 0.59 pct to 11.05%, and net financial income was 200,000, which is 100,000 less than the same period last year. The increase in the cost ratio is mainly due to a slight decline in the company's revenue side, while some of the internal expenses of sales and management expenses are fixed costs, resulting in an increase in the share of expenses in revenue. Net profit margin: Since the increase in the expense ratio was slightly higher than the increase in gross margin, the net profit margin fell slightly by 0.14 pct to 12.39%. Overall, the performance is generally in line with our previous expectations. We maintain our view of the company: high profit+high margin of safety+high dividend. As one of the top two business districts in Shanghai, the Nanjing Road business district is superior to the Xujiahui business district from the perspective of passenger traffic and sales of several single department stores, but due to the large number of department stores in the Nanjing Road business district, the bargaining power of each store over suppliers may be weaker than that of the Xujiahui business district, which has fewer core stores, from the perspective of profitability, the gross margin of the Xujiahui business district (Hong Kong Exchange and Pacific Department Stores is also about 22-24%). The gross margin of department stores is not inferior to that of the Nanjing Road business district. All four of the company's stores are owned by the parent company or subsidiary, with a total area of about 120,000 square meters. We conduct a sensitive analysis of the company's own property from the perspective of revaluation. Under the three conditions of conservatism, neutrality, and optimism, with reference to housing prices and store transfer prices in the Housing Search Network region, we gave our own properties a revaluation unit price of 50,000/square meter, 60,000/square meter, and 70,000/square meter respectively. In addition to the company's monetary capital, accounts receivable, and deducting liabilities and payables, the company's revaluation values were about 6.2 billion, 7.4 billion, and 8.6 billion, respectively. Judging from the company's historical dividend data, the company's annual dividend payment rate remains at about 60%, the company's fundamentals are stable, there are no major capital expenses in the short term, and there is plenty of cash flow. We expect the company to continue to maintain a high dividend payment rate in the future. Among the 93 listed companies in the CITIC Retail category, the company ranked third with a dividend rate of about 2.5% (according to the closing price on October 22, 2015). In a situation where traditional retail prosperity continues to decline, the company's net profit and cash flow are relatively stable. The high dividend payment rate over the years shows that the company has a good corporate governance environment, maximizes shareholders' interests, and is worth allocating long-term investment by value investors when the company's margin of safety is high. Profit forecasts and valuations. We expect the company's net profit attributable to the parent company's shareholders in 2015-2017 to be 262 million, 268 million, and 277 million respectively, up 1.55%, 2.29%, and 3.19% respectively. Based on the 2015/10/22 closing price, the company's corresponding PE for 2015-2017 was 23.96, 22.45, and 21.76 times. We used the revaluation value to value the company and gave the company a target price of 17.80 yuan, maintaining a “buy” rating based on the company's closing price on the previous trading day. Risk and uncertainty. 1) Future online giants combined with offline retail sales fell short of market expectations; 2) Shanghai's state-owned enterprise reform fell short of expectations.