The company's 1H2018 revenue increased 1.15% year on year, and net profit to mother increased 42.32% year on year. On the evening of August 23, the company announced the 2018 semi-annual report. 1H2018 achieved operating income of 6.760 billion yuan, up 1.15% year on year, and realized net profit of 71 million yuan to fully diluted EPS of 0.14 yuan, up 42.32% year on year, achieving net profit without return to mother of 58 million yuan, an increase of 46.91% year on year. The performance is in line with expectations. The main reasons why the net profit growth rate of 1H2018 was higher than the revenue growth rate: 1) gross margin increased 0.84 percentage points compared to the same period of the previous year, mainly due to the company's strict control of gross profit; 2) management and finance expense ratios decreased by 0.11/0.29 percentage points, respectively, compared to the same period of the previous year. The main reasons were a decrease in the number of stores opened, a decrease in loan amounts, and a decrease in interest expenses. The comprehensive gross margin increased by 0.84 percentage points, and the cost ratio increased by 0.33 percentage points during the period, 1H2018 opened a new Zibo Yiyuan store, reopened part of the Dezhou University Road store expansion, and closed the Linyi Lanling store. 1H2018's main business revenue was 6.755 billion yuan, up 1.20% year over year. 1H2018's consolidated gross margin was 18.96%, up 0.84 percentage points from the same period last year. The 1H2018 company's expense ratio for the period was 16.22%, up 0.33 percentage points from the same period last year. Among them, the sales expenses ratio was 12.55%, up 0.73 percentage points from the same period of the previous year, and the management/ finance expenses ratio was 2.07%/1.61%, respectively, down 0.11/0.29 percentage points from the same period last year. The leading retail company in Shandong Province, with a large number of stores, is a large-scale commercial retail enterprise based in Shandong and taking into account the development of surrounding regions outside the province. It covers the three business formats of department stores, large integrated supermarkets, and shopping centers. As of the end of June 2018, the company had 129 stores, including 126 stores in 12 cities in Shandong Province, and 3 stores in Shijiazhuang, Baoding, and Zhangjiakou, Hebei. In addition, the company was entrusted with the management of 48 unlisted stores under Shandong Ginza Mall Co., Ltd. Due to the intense competition in the retail market in Shandong Province, many large retail enterprises such as Liqun and Jiajiayue have strong operating capabilities, making it difficult to increase the company's market share. Maintain profit forecasts and maintain a “neutral” rating. We believe that the retail market in Shandong is fiercely competitive, it is difficult to increase the company's revenue growth rate significantly, and the effect of controlling costs and expenses is limited. We maintain our forecast for the company's 2018-2020 EPS of 0.14/ 0.14/ 0.14 yuan, respectively. The company's price-earnings ratio is at a high level, maintaining a “neutral” rating. Risk warning: The retail industry in Shandong Province is fiercely competitive, and the risk of cross-regional expansion