The company's 1Q2018 revenue increased 6.32% year on year, and net profit decreased by 4.69% year on year. On the evening of April 26, the company announced the 2018 quarterly report: 1Q2018 achieved operating income of 1,115 billion yuan, a year-on-year increase of 6.32%; realized net profit of 38 million yuan, equivalent to a total dilution of EPS 0.09 yuan, a decrease of 4.69% year on year; realized net profit of 38 million yuan, a year-on-year decrease of 2.60%, slightly below expectations. The company's accounts receivable balance at the end of the reporting period was 7.16 million yuan, an increase of 51.43%. The reason was that the balance of accounts receivable from some group buying customers did not reach the settlement period; the balance of other accounts payable at the end of the current period was 298 million yuan, an increase of 197.14%. The main reason was that He'an Investment received 187 million yuan in supplementary working capital payments. The consolidated gross margin increased by 1.42 percentage points, and the period expense ratio increased by 1.69 percentage points. The company's consolidated gross margin in 1Q2018 was 24.06%, up 1.42 percentage points from the same period last year. The 1Q2018 company's period expense ratio was 18.82%, up 1.69 percentage points from the same period last year. Among them, the sales/management/finance expense ratio was 16.57%/2.73%/-0.48%, respectively, and 1.19/ 0.44/ 0.07 percentage points from the same period last year. The company's sales and management expenses all increased during the reporting period, mainly due to increased leasing and labor costs due to opening stores. As the main theme was adjusted, the cost pressure was high. The company opened 6 new stores during the reporting period, including 2 supermarkets, 4 small-format stores, and 1 closed supermarket. The total number of stores reached 174 by the end of the reporting period. The company has a certain regional scale advantage in Ningbo and surrounding areas. As the degree of integration between the company and Ali's technology, inventory management, and logistics advantages gradually deepens, operating efficiency is expected to improve. We believe that the main theme of the company throughout the year will continue to be the construction of new stores and the adjustment of old stores, and the corresponding cost pressure is expected to be high. Maintaining the profit forecast and maintaining the “neutral” rating, the company's 1Q2018 performance was slightly lower than expected, but considering that as the company's new stores continue to increase and existing stores are adjusted, the company's profit is expected to recover under the influence of scale effects, we maintain our forecast of the company's overall diluted net profit of 0.28/ 0.31/ 0.35 yuan in 2018-2020, respectively, and maintain the “neutral” rating. Risk warning that the results of the new business format of cooperation with Ali have not met expectations, and the CPI growth rate has fallen short of expectations.