The company's 13-year revenue was 12.716 billion, down 1.53% from the same period last year, and the net profit belonging to shareholders of listed companies was 24 million, up 126.41% from the same period last year. 14Q1 realized revenue of 3.419 billion, down 3.64% from the same period last year, and realized net profit belonging to listed companies of 24 million, up 3.07% from the same period last year. After the early peak of shop closure, the company turns losses into profits, and the profit level tends to be normalized, but the current prosperity of the supermarket industry is low, the pressure of labor costs is still high, and the profitability of the company is still at a low level.

In 2013, the comprehensive gross profit margin increased by 0.69% to 20.99% compared with the same period last year, and in 2014, 1Q gross profit margin rose sharply from 1.46% to 21.64% compared with the same period last year. The main reason is that the company has achieved success in category management optimization and centralized procurement, and the comprehensive gross profit margin has increased for seven consecutive quarters. The company is more effective in tapping internal potential in the context of depressed revenue.

The rate of sales management expenses fell by 0.44% to 19.76% in 2013, which rose 1.3% to 19.77% year-on-year in 2014, on the one hand, due to the decline in fees brought about by the closure of underperforming stores, and on the other hand, labor and rental costs continued to rise. coupled with the decline in same-store growth, the expense rate is still rising.

From a regional point of view, income in South China fell by 6.12% in 2013, including 8.7% in Guangdong Province, 6% in Northwest China, 1.2% in Southwest China and 6.2% in North China. The trend in South China is still downward. We judge that the main reason is that the low-end people mainly located by the company have a relatively obvious trend of returning to the central and western regions in South China.

Looking to the future, the company will maintain the expansion strategy of community stores in first-and second-tier cities and hypermarkets in third-and fourth-tier cities. It is expected that 10 new stores will be added every year, with an area growth rate of about 8%. In the context of oversupply and e-commerce diversion, the company is expected to face more serious diversion pressure in the next few years, especially the same store growth pressure in Guangdong will continue. In the past 14 years, the company still focuses on the improvement of internal efficiency with cost control as the core, and labor and rental costs are the core factors affecting the recovery of the company's net interest rate.

We estimate that the EPS of the company in 2014-16 is 0.06,0.07,0.07 yuan, and the compound growth rate is relatively low. Give a neutral-B investment rating. The catalyst of the company's stock price also lies in the improvement of the governance structure brought about by the successful implementation of the executive incentive program.

Risk factors: the economic downturn affects consumer confidence and the pressure of regional competition increases.