1Q2018 revenue increased by 2.41% over the same period last year, and net profit from home increased by 41.09% compared with the same period last year.

The company announced its quarterly report for 2018: 1Q2018 realized operating income of 3.339 billion yuan, an increase of 2.41% over the same period last year, and realized a net profit of 292 million yuan, equivalent to 0.17 yuan of fully diluted EPS, an increase of 41.09% over the same period last year; and realized net profit of 279 million yuan, an increase of 41.04% over the same period last year. The performance is in line with expectations.

During the reporting period, the company's performance increased more than the same period last year, mainly due to: 1) the early store adjustment was effective and the gross profit margin increased; 2) some of the houses of the company were converted into investment real estate in December 2017. due to the subsequent measurement of the company's investment real estate at fair value, the corresponding depreciation expense decreased. 3) the company provided a loan line of 400 million yuan to Zou Zhaobin, a minority shareholder of Victoria Group, resulting in an increase in interest income in the reporting period compared with the same period last year.

The comprehensive gross profit margin increased by 1.61 percentage points, and the expense rate decreased by 1.34 percentage points during the period.

1Q2018's consolidated gross profit margin was 27.33%, up 1.61% from a year earlier.

The period expense rate of 1Q2018 was 13.45%, down 1.34% from the same period last year, of which the sales / management / financial expense rate was 8.57% / 2.55% / 2.32% respectively, which changed by-1.32% / 0.40% /-0.43% respectively over the same period last year.

The synergistic effect of store integration is gradually reflected.

During the reporting period, the synergy of the company's store integration was gradually reflected, and the gross profit margin increased. New business type stores in Inner Mongolia have great growth potential and are expected to become a new growth point for future performance. We believe that the future development direction of the company is still based on internal digestion and integration, and with the transformation and upgrading of existing stores, the company's profitability may be further improved.

Maintain profit forecast and maintain "overweight" rating

With the progress of the company's store integration work, the performance will gradually improve. We maintain the forecast of the company's comprehensive dilution EPS of 0.69 / 0.73 / 0.76 yuan for 18-20 years, and maintain the "overweight" rating.

Risk hint

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