Revenue began to decline in 13Q4. Lower gross margin and higher tax rates increased pressure on performance. In 2013, the company achieved operating income of 1,259 billion yuan, an increase of 6.76%; net profit was 71 million yuan, a decrease of 48.95%; EPS was 0.22 yuan, and 10 payments were 0.4 yuan. Net profit was lower than the revenue growth rate mainly due to a sharp decline in gross margin, an increase in financial expenses, and an increase in income tax rates (not qualified as a high-tech enterprise in '13). 13Q1-14Q1 revenue was +14.4%, +10%, +21.7%, -9.4%, and -22%, respectively. As can be seen, there was a decline from the 13Q4 revenue side, and the decline in 14Q1 increased; net profit was -49%, -5.7%, -115.9%, -52%, and -78.6%, respectively. The share of exports has increased. The decline in group buying business has clearly affected group buying and retail sales. Judging from the income structure, revenue growth in 2013 mainly came from exports. Exports increased by 52%, domestic sales fell 3%, and the share of exports increased from 18% to 26%. In terms of domestic sales, group purchases are estimated to be 310 million, a decrease of 18%; in terms of brands, the number of company channels in 2013 was 697 (178 direct sales, 519 franchisees), with an extension growth rate of 7%, mainly due to direct business expansion (30 new direct businesses, an increase of 20%, 14 new franchisees, an increase of 3%), and the same stores fell 9% (including the impact of the decline in group purchases in terminal stores). Gross margin continued to decline. Inventory declined and the structure was basically reasonable. The 13-year gross margin decreased by 4.24 PCT to 37.35%, and 14Q1 decreased 2.7 PCT to 35.95%, mainly due to increased domestic sales discounts and a rise in the share of export revenue with low margin, which lowered the gross profit margin. In 2013, the sales expense ratio increased by 0.08 PCT to 22.07%, and the management expense ratio - 0.26 PCT to 4.66%. The financial expense rate increased by 1.76 PCT to 2.22%. Since it did not qualify as a high-tech enterprise in 13 years, the income tax rate increased by 5.5 PCT. The 13-year inventory fell 7% from the beginning of the period to 375 million, and the 14Q1 inventory fell 7.5% from the beginning of the year to 347 million yuan. The company's current inventory structure is basically reasonable: off-season (12 years and before) accounts for about 34%, preparation accounts for about 2%, and current season (13-14 years) accounts for about 64%. It is estimated that the sell-out rate for fall and winter products is 74%. Launch high-end customization as the focus of future development and cultivate new profit growth points. In 2013, the company launched the Planeo high-end custom brand. In less than three months after the launch of the operation plan, Planeo's high-end customization was widely recognized by specialty stores and customers, and valuable experience has been accumulated for the development of the company's personalized customization business. Planeo's high-end customization sales began in December 2013, and sales from 13.12 to 14.2 were about 3.87 million yuan, and gross margin was around 84%. In 2014, the company will strengthen the promotion of personalized customization business and launch a wedding series and Shinur customization business on the basis of Planio Haute Couture. In addition, the company launched a new Runer women's clothing brand in the fall and winter of '13, targeting women's business wear and fashion clothing. It accounts for a very small proportion, and there is no separate store. Previously, the company also had a womenswear business, and its gross margin was high, at around 45%, which was higher than the company's gross profit margin for menswear; however, until now, the company had been relatively cautious about developing the women's clothing category, and growth was not high, accounting for about 10% of revenue. Management adjustments, and performance continued to be under pressure for 14 years. The board of directors of the company maintained a “neutral” rating. The board of directors of the company received written resignation reports from Chairman Wang Guibo and General Manager Chen Yujian on 14.1.18; on January 21, Chen Yujian was elected chairman and Zhao Xuefeng, the former vice president of the company, was appointed as general manager. At present, the company's inventory and expenses are gradually being controlled, but the impact of anti-corruption on customization is evident (in addition to corporate group purchase orders, group purchase orders at terminal stores are also affected, causing retail business to be dragged down). At the same time, the downward trend in gross margin continues, and the pressure on the company's performance has further increased. The failure to obtain certification as a high-tech enterprise in 13 years has caused the tax rate to rise, increasing the decline in performance. In 2013, the company launched high-end customization, hoping to cultivate new profit growth points. The company expects net profit to drop by 50-80% from January to June 2014. We judge: (1) The company announced in April '13 that it will invest in the construction of the Shinoor Menswear Industrial Park (Phase I), with an annual production capacity of 720,000 casual tops to support the ODM of Uniqlo and MOSS. It is expected that production will be put into operation in July-August 2014 and that production will be reached by the end of the year, which will contribute positively to the revenue side, but due to the low gross margin of OEM, it is estimated that the overall gross profit margin will be reduced; (2) the company's 14 spring and summer orders will drop by 10%. It is estimated that the fall and winter orders will remain flat (but we need to observe later direct sales and franchise conditions) ODM production capacity contributed, but it is still difficult to rectify revenue throughout the year; (3) menswear is still there During the adjustment period, gross margin will continue to decline when terminal discounts do not decrease and the share of exports and ODM increases; (4) the financial expense ratio is expected to decline, but the sales and management expense ratio is rigid, and the company is still renovating stores, so there is not much room for annual cost reduction. The 14-16 EPS was adjusted to 0.11, 0.12, and 0.14 yuan to maintain a “neutral” rating.