The company's revenue in 2017 increased by 24.92% over the same period last year, and its net profit increased by 82.12% compared with the same period last year.

The company announced its annual report for 2017: operating income reached 11.761 billion yuan in 2017, an increase of 24.92% over the same period last year; net profit of 1.035 billion yuan, or 0.60 yuan of fully diluted EPS, was realized, an increase of 82.12% over the same period last year; and net profit of 781 million yuan was deducted, an increase of 72.97% over the same period last year, and the performance was lower than the lower limit of KuaiBao's guidance range released earlier by the company. The main reason is that the actual goodwill impairment of Renhe and Spring subsidiaries is greater than the previous expected impairment.

Judging from the split in a single quarter, the company's 4Q2017 achieved operating income of 3.563 billion yuan, an increase of 7.34% over the same period last year, which was greater than the 3.84% increase of 3Q2017 growth. 4Q2017 realized a net profit of 478 million yuan, an increase of 334.53% over the same period last year, and an increase of more than 45.36% of 3Q2017 growth.

The comprehensive gross profit margin increased by 1.92 percentage points, and the expense rate decreased by 0.66 percentage points during the period.

The company's comprehensive gross profit margin was 28.10% in 2017, up 1.92 percentage points from the same period last year.

In 2017, the company's expense rate during the period was 15.70%, down 0.66% from the same period last year, of which the sales / management / financial expense rate was 9.91% / 2.89% / 2.90%, respectively, changing by-0.76% /-0.10 / 0.20% over the same period last year.

The layout of the country is advancing steadily, and the integration work may bring about an improvement in profitability.

In 2017, the company made great progress in store integration, with revenue and profits in South China and Inner Mongolia making a great contribution. At the beginning of 2018, the company entered Chongqing through the acquisition of Chongqing Maoye. We believe that the future development direction of the company will be based on internal digestion and integration, and with the transformation and upgrading of existing stores, the company's profitability may be further improved.

Slightly lower the profit forecast and maintain the overweight rating

New business type stores in Inner Mongolia have great growth potential, and made a great contribution to the company's performance growth in 2017, but based on the uncertainty of regional economic development and the uncertainty of store integration process, the role of promoting the company's future performance is not clear, in addition, the company's annual performance is lower than the previous guidance range. Therefore, we slightly downgrade the forecast for the company's fully diluted EPS from 2018 to 2020 to 0.69 / 0.73 / 0.76 yuan (previously 0.71 / 0.73 / 0.77 yuan) to maintain the overweight rating.

Risk Tips:

Regional economic growth is not up to expectations, the acquisition of store integration is not up to expectations.