Key investment events: The company will announce its first quarter results on May 15. The company also announced its USD 500 million, a coupon interest rate of 4.5%, and notes due in 2018 will be listed today. The capital raised will be used to repay $450 million of debt due in November 2013. Valuation and target price: We lowered our FY13-15E earnings per share forecast by 7.8%/10.3%/13.1% to RMB 0.30/0.32/0.33 to reflect higher-than-expected operating expenses. We also lowered our target price from HK$4.8 to HK$3.7, based on a 10-fold price-earnings ratio in '13. Currently, the company's stock price corresponds to a price-earnings ratio of 11.1 times in '13 and 10.5 times in '14. We downgraded the company from neutral to reduced holdings, mainly due to its inferior sales performance and poor first-quarter results. Key Assumptions: We expect FY13-15E same-store sales to grow by 3%/5%/6%, and total construction area to rise by 14.7%/7.9%/8.0%. We expect a deduction rate of 18.2%/18.1%/18.0% for counters to reflect the effects of changes in category mix and dilution in new stores. It is different from the public's perception of the first quarter results forecast. We expect total sales revenue to rise 4.8% to RMB 5.1 billion, total operating income to rise 4.7% to RMB 1.5 billion, and profit attributable to shareholders to fall 24.1% to RMB 237 million. We believe that same-store sales were flat, and that negative operating leverage and a high base led to weak first-quarter results. Compared to the increase in same-store sales of its peers with the highest number of units in 1Q13, we expect Parkson's same-store sales growth to be the same as year on year, mainly due to its relatively mature store mix and weaker execution than that of its peers. Due to its weak sales revenue growth (we expect 4.8%) and the operating expenses of large enterprises (we expect employee/rent costs to rise 16.8%/23.3% in the first quarter), we expect the company to once again announce a decline in single-quarter profit. Profit attributable to shareholders fell 24.1% to RMB 237 million, and we expect to account for 28% of the full year's net profit. Considering the gradual loss of the company's competitive advantage in the department store industry and the bleak outlook for the industry, we lowered our earnings per share forecast by 7.8%/10.3%/13.1% to RMB 0.30/0.32/0.33, lowered the target price from HK$4.8 to HK$3.7, and downgraded the rating to reduced holdings. Catalyst: Quarterly same-store sales growth fell short of expectations, first-quarter results fell short of expectations, and competition intensified. Risks: New stores lost less than expected, the economy recovered better than expected, and the government introduced policies to stimulate consumption.