The company's 1Q2018 revenue decreased by 20.63% year on year, and net profit decreased by 2.94% year on year. On April 28, the company announced the 2018 quarterly report. 1Q2018 achieved operating income of 678 million yuan, a year-on-year decrease of 20.63%, a decrease of less than 34.14% from 4Q2017, and realized net profit of 29 million yuan, which was converted to a fully diluted EPS of 0.03 yuan, a decrease of 2.94% year on year, while 4Q2017 net profit increased 17.47% year on year. Net profit after deducting non-return to the mother was 29 million yuan, an increase of 7.23% over the previous year, and the performance fell short of expectations. The main reasons for the significant decline in revenue of 1Q2018 are: 1) the supply chain management business achieved revenue of 771,900 yuan, a decrease of 265 million yuan from the same period last year, mainly due to the company's adjustments to commodity business types, and 2) the commercial real estate business achieved revenue of 160 million yuan, a decrease of 52 million yuan from the same period last year, mainly due to the fact that sales of the Lanzhou International Trade Center project are nearing completion. The consolidated gross margin increased by 10.65 percentage points, and the expenses ratio for the period increased by 5.56 percentage points. There was no change in the 1Q2018 company's stores. The commercial retail business achieved revenue of 494 million yuan, an increase of 40.37% over the previous year, mainly due to the increase in sales revenue after the reopening of Hall A and B of Dongbai Center. The company's consolidated gross margin in 1Q2018 was 27.46%, up 10.65 percentage points from the same period last year. The main reason was the sharp decline in the supply chain management business with low gross margin. The 1Q2018 company's period expense ratio was 12.83%, up 5.56 percentage points from the same period last year. Among them, the sales/management/finance expense ratio was 7.66%/3.25%/1.92%, respectively, up 2.96/ 0.94/1.66 percentage points from the same period last year. The department store business has regional advantages. The negative impact of subway construction has been eliminated, and revenue has significantly recovered in terms of department store business. The company's main stores, Dongbai Center, are located in the Dongjiekou business district of the Fuzhou commercial center. The geographical location is superior. Early business activities were affected by subway construction. The subway construction was completed in 2017, and the negative impact was eliminated. The underground part of Dongbai Center is seamlessly connected to Fuzhou Metro Line 1, and transportation is convenient. In addition, the company will build Hall C of Dongbai Center. In the future, the three pavilions will be operated jointly to form a large-scale urban complex with an area of more than 180,000 square meters. Downgrade the profit forecast to the “increase in holdings” rating. We believe that the company's retail business revenue will continue to rise, the real estate business will gradually shrink, and the company's overall profit will not increase significantly. We lowered our forecast for the company's EPS for 2018-2020 to 0.29/ 0.31/ 0.33 yuan (previously 0.32/ 0.36/ 0.41 yuan), respectively, to the “increase in holdings” rating. Risk warning: The recovery of the retail business did not meet expectations, and the contribution of the real estate business fell short of expectations.