Event: The company released its 2015 interim report. The company achieved operating income of 1,034 billion yuan in the first half of the year, an increase of 2.32% over the previous year; during the same period, the company achieved net profit attributable to the parent company of 131 million yuan, an increase of 5.11% over the previous year. Meanwhile, the company expects net profit attributable to the parent company from January to September 2015 to be between 163 million and 199 million, an increase of -10% over the previous year. The performance was in line with expectations. The decline in the cost ratio exceeded the decline in gross margin, so the growth rate of net profit was slightly higher than the growth rate of revenue. Gross profit margin: The consolidated gross margin of the 2015H1 company was 29.95%, a slight decrease of 0.27pct from 30.22% last year. Expense ratio: The company's three cost rates all declined by varying degrees. Among them, the sales expense ratio decreased by 0.16 pct (mainly the reduction in wage and advertising fee rates), the management expense ratio decreased by 0.27 pct (mainly depreciation and office expenses), and the financial expenses rate fell 0.04 pct, and the total three fees fell by 0.46 pct. Net profit margin: Since the decline in the expense ratio exceeded the decline in gross margin, the company's net profit margin belonging to the parent company's shareholders rose from 12.93% to 13.24%, up 0.31pct, making the company's net profit growth rate higher than the revenue growth rate. Overall, the company's performance has maintained a relatively stable trend, in line with our previous expectations. The company continues to refine the department store business, and the E-MEC system is progressing steadily. 1) In the second half of 2015, the company will continue to make detailed adjustments to the four stores to dynamically meet the needs of major customers. Among them, Huijin Department Store will introduce trendy and exquisite popular catering brands; the Hongqiao store will expand women's clothing categories and support the sale of “star brands”; Shanghai 600 will step up product adjustments across floors; and Huilian Commercial Building actively participated in the Xujiahui Business District flyover renovation project. 2) With years of experience in single product management (SKU) and physical store operation, the company formed a R&D team with the School of Software of Shanghai Jiao Tong University to develop “ERP+APP” mobile e-commerce (E-MEC) with full integration of online and offline channels since 2014. Currently, the E-MEC software's first feature, “electronic invoicing,” has been launched in some Huijin department stores. In the future, the company will actively expand the scope of application of E-MEC software and promote Huijin Department Store to fully implement simultaneous online and offline operation of functions such as “single products, inventory, orders, promotions, payment, and data.” 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. Out of 93 listed companies in the CITIC Retail category, the company ranked second with a dividend rate of about 2.5%. 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 parent company shareholders in 2015-2017 to be 266 million, 275 million, and 281 million respectively, up 3.24%, 3.28%, and 2.22% respectively. Based on the 2015/8/21 closing price, the company's PE corresponding to 2015-2017 is 22, 21, and 20 times. We valued the company based on the revaluation value and gave the company a target price of 17.80 yuan. Based on the company's closing price on the previous trading day, we adjusted it to a “buy” rating. 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.