1H2018's revenue increased 7.91% year on year, and net profit decreased 13.81% year on year. On the evening of August 28, the company announced the 2018 semi-annual report. 1H2018 achieved operating income of 2,077 billion yuan, a year-on-year increase of 7.91%; realized net profit of 57 million yuan, equivalent to a comprehensive dilution of EPS of 0.14 yuan, a year-on-year decrease of 13.81%; and realized net profit of 44 million yuan, a year-on-year decrease of 22.25%. The performance was in line with the company's performance report issued earlier. Looking at the quarterly split, the company achieved operating income of 962 million yuan in 2Q2018, an increase of 9.82% over the previous year, and realized net profit of 119 million yuan, a year-on-year decrease of 28.07%. The consolidated gross margin increased by 0.81 percentage points, and the expenses ratio for the period increased by 1.80 percentage points. The consolidated gross margin of the 1H2018 company was 23.86%, up 0.81 percentage points from the previous year. The 1H2018 company expense ratio for the period was 20.33%, up 1.80 percentage points from the previous year. Among them, the sales/management/finance expense ratio was 17.59%/3.23%/-0.49%, respectively, a change of 0.99/0.72/ 0.08 percentage points from the previous year (same period). The large increase in the sales expense ratio was mainly due to the year-on-year increase in the cost of opening new stores and renovating existing stores during the reporting period. The speed of exhibition stores accelerated, and fresh revenue grew rapidly during the reporting period, the company opened 18 new stores in various business formats, of which 12 were opened in 2Q2018. Currently, the company has signed contracts to reserve 14 stores to open. We believe that this year the company is expected to achieve the goal of opening no less than 40 stores throughout the year, and the speed of showrooms is expected to accelerate in the second half of the year. With the gradual deepening of business cooperation between the Ali team and the company and the gradual implementation of fresh food areas in stores, the company has made significant progress in the fresh food sector. Fresh revenue during the reporting period increased by 30.24% year on year, effectively driving up the company's overall revenue recovery. With the continuous promotion and improvement of the fresh food business format, it is expected that the drainage role of the company's stores will increase, which in turn will lead to further growth on the revenue side. Maintain the profit forecast and maintain the “neutral” rating We maintain the forecast for the company's fully diluted EPS in 2018-2020 to be 0.24/ 0.24/ 0.27 yuan respectively. Currently, the company's valuation level is still high, maintaining a “neutral” rating. Risk warning: The results of the new business format of cooperation with Ali did not meet expectations, and the CPI growth rate fell short of expectations.