Main points of investment:

The company released its 2015 semi-annual report on August 22nd. During the reporting period, the operating income was 3.775 billion yuan, down 4.10% from the same period last year; the total profit was 161 million yuan, up 3.94% from the same period last year; and the attributable net profit was 125 million yuan, up 4.62% from the same period last year, deducting 105 million yuan from non-net profit, down 7.08% from the same period last year. In the first half of 2015, the diluted earnings per share was 0.36 yuan, the return on net assets was 5.16%, and the operating cash flow per share was-0.21 yuan.

The company also disclosed its operating forecast for January-September 2015: net profit from January to September 2015 is expected to increase by 0-20% compared with the same period last year, corresponding to net profit of 164.49 million yuan in the first three quarters of 2014, with a net profit range of [164.49 million yuan, 197.38 million yuan] and an EPS range of [0.48 yuan, 0.58 yuan].

Brief comments and investment suggestions. The company's first-half revenue was 3.775 billion yuan, down 4.10% from the same period last year, and 4.39% and 3.80% respectively in the first and second quarters. Among them, the income in Guangzhou fell by 4.21%, and the total income outside the province fell by 6.01%, indicating that the company faced weak consumption situation and competitive pressure in the first half of the year. During the reporting period: 1) invested 35 million yuan to participate in China Post's consumer finance, expand the business field and promote the transformation and upgrading of the department store home page; 2) the Guangzhou Baihui cross-border shopping channel was officially launched in May this year. And in Guangbai Gold Jewelry Building, Guangbai Xinyi City, Xindaxin Panyu store three stores to open experience stores. 3) Xinda Xin Kaiping Dian (opened in December 14) opened the first Ocean-themed R us Paradise, creating the largest theme children's park in Kaiping, integrating amusement toys, art early education, family parents and other elements, effectively driving sales to lead the trend. During the reporting period, the company's gross profit margin increased by 0.46 percentage points year-on-year to 18.90%, mainly due to an increase of 0.35 percentage points in stores in Guangzhou.

Under the adverse situation of consumption, the company strictly controlled the expenditure during the reporting period, and most of the main expenses and expense rates decreased, but the labor and rental property expenses were under pressure. Sales expenses increased by 1.04 million yuan over the same period last year, and the expense rate increased by 0.53 percent, of which depreciation and amortization, water and electricity, transportation and miscellaneous expenses all decreased, while leasing expenses increased by 7.46 percent. The management expenses only slightly decreased by 2.09 million yuan, and the expense rate increased slightly by 0.01 percent. The financial expenses in the first half of 2015 were 7.87 million yuan, an increase of 6.8 million yuan over the same period last year, mainly due to a decrease of 6.4 million yuan in interest income. The overall expense rate for the period was 14.10%, an increase of 0.72 percentage points over the same period last year.

The company's operating profit in the first half of the year was 130.69 million yuan, a slight decrease of 6.94% compared with the same period last year. During the reporting period, the company made an investment income of 41.15 million yuan, of which the investment income from the disposal of financial assets and financial management increased by 25.03 million yuan over the same period in 2014, while the hedging operating profit decreased, driving the total profit of the company to increase by 3.94%, and the attributable net profit was 125 million yuan, an increase of 4.62% over the same period last year.

Among the main subsidiaries: the revenue of Guangbai Xinyi City was 213 million yuan, up 1.54% from the same period last year, and the net profit was 27.62 million yuan, down 6.43% from the same period last year.

The judgment of the company. (a) looking ahead to 2015-2016, the company's performance is expected to maintain steady growth of 5-10 per cent as the economic environment stabilizes, corporate showroom slows, and investment income contributed by wealth management products and microloans. (B) Guangzhou SASAC holds 53.23% of the company through Guangbai Group (the proportion of 2Q2015 reduction is 0.95%), and the Guangzhou Friendship Reform Plan has been introduced. If the reform of state-owned assets in Guangzhou is further promoted, Guangbai, which is in a competitive field, is expected to become the target of promotion and achieve performance improvement after the optimization of governance incentive structure.

(C) in its 2014 report, the company has put forward the 2015 development strategy: "expand innovative investment, accelerate the integration of mergers and acquisitions in the industry, continue to deepen the development of regional chains, and promote the great-leap-forward development of enterprises with the help of extensional growth; actively apply Internet technology, speed up the development of smart business, fully realize online and offline integration, and strive to develop new e-commerce businesses. Continue to improve the ability of marketing innovation and integration, take the initiative to explore buyer-made management, enrich store experience elements, and promote the sustainable development of the company. "

Maintain profit forecasts. It is estimated that the company's EPS from 2015 to 2017 will be 0.73,0.79 and 0.89 yuan respectively, up 4.52%, 8.2% and 12.71% over the same period last year. The company's current stock price is 14.92 yuan, corresponding to 20.4 times, 18.9 times and 16.8 times of PE from 2015 to 2017, respectively, which is lower than the industry average. A 12-month target price of 18.18 yuan (corresponding to 24.9 times PE in 2015) is given to maintain the "overweight" rating.

Risk and uncertainty. The regional consumption environment is still in the doldrums and the competitive pressure is increasing; the effect of new business development and the progress of business transformation are lower than expected; if the company has unconventional store expansion, it will break the matching of income and expenses and bring greater cost pressure in the short term.