1Q18 revenue fell short of expectations. Huijishan announced 1Q18 results, with revenue of 389 million yuan, an increase of 3.7%, and net profit of 86 million yuan, an increase of 4.3%. Revenue from regions other than Jiangsu, Zhejiang, and Shanghai declined in the first quarter. The product structure continued to be optimized, and gross margin increased by 0.56ppt over the same period last year. At the same time, it was announced that the application to issue convertible bonds was not approved by the Securities Regulatory Commission, but we expect that it is relatively unlikely that the company will terminate the acquisition of Xianheng Foods. The trend base market has helped the main rice wine industry to grow steadily. The company has the largest market share in Zhejiang Province. Growth is mainly due to steady structural upgrades, and the growth rate is around 3-5%. The Shanghai market focuses on the two brands Wupelhat and Huijishan. Marketing investment was increased in '17, and the growth rate is expected to reach around 10% in '18. Through investment expansion to northern Jiangsu and structural upgrading in southern Jiangsu, the overall growth rate of the Jiangsu market can reach about 25%. However, the company currently lacks a clear nationwide expansion strategy and market investment, and the overall revenue growth rate and long-term growth prospects are under pressure. Continue to pay attention to the company's extended mergers and acquisitions. In 2016, the company completed the acquisition of Wu Felt Hat and Tang Song. Currently, it plans to acquire Xianheng Foods and enter the fermented milk and cooking wine industry. Continued mergers and acquisitions are not ruled out in the future. The company's idea for external expansion is clear, which is to focus on the main rice wine business, expand the overall scale through mergers and acquisitions within the industry or in collaboration with the industry, and enter other rapidly growing market segments. Furthermore, the company has strong scientific and technological research and development capabilities and comprehensive management capabilities, and is able to better integrate the acquired enterprises. Taking Wu Felt Hat as an example, through technological transformation of production and standardized management of channels, the company's revenue increased by more than 20% in 2017, gross margin and net profit margin also improved markedly, and overall efficiency was significantly optimized. Profit forecast Due to lower revenue forecasts, we lowered our 2018/19e profit forecast by 6.5%/13.7% from 0.42/0.51 to 0.39/0.44 yuan. The valuation and recommendations suggest that the company's current stock price corresponds to 3.9/3.6 times P/S in 18/19, maintaining the recommended rating, but due to the downgradation of the revenue forecast, the target price was lowered by 16% to 14 yuan, corresponding to 5.1/4.7 times P/S in 18/19, so there is 32% room compared to the current stock price. The risk is that if there is a continued lack of investment outside of Jiangsu, Zhejiang, and Shanghai, revenue growth will face great pressure.