The company's 1-3Q2018 revenue increased by 4.77% compared with the same period last year, and the company's net profit increased by 14.51% over the same period last year. On the evening of October 25, the company announced that 1-3Q2018 realized operating income of 6.76 billion yuan, an increase of 4.77% over the same period last year; and realized net profit of 241 million yuan, equivalent to 0.33 yuan of fully diluted EPS, an increase of 14.51% over the same period last year. The non-return net profit was 222 million yuan, an increase of 8.28% over the same period last year, and the performance was in line with expectations.

In a single quarter, the company's 3Q2018 achieved an operating income of 2.236 billion yuan, an increase of 1.15% over the same period last year, and a net profit of 22.61 million yuan, a decrease of 9.04% over the same period last year.

The comprehensive gross profit margin increased by 0.58%, and the expense rate increased by 0.46% during the period. 1-3Q2018's comprehensive gross profit margin was 13.67%, up 0.58% from the same period last year. Among them, the gross profit margin of department store / automobile / catering and food business is 16.39% / 8.59% / 44.82% respectively, which is-0.68 / 1.26 / 0.02 percentage points higher than the same period last year.

The expense rate for the period of 1-3Q2018 was 9.14%, an increase of 0.46% over the same period last year, of which the sales / management / financial expense rate was 4.17% / 4.63% / 0.33% respectively, with a year-on-year change of 0.30% 0.14% / 0.03% respectively.

The automobile business expanded in an orderly manner, and the formats of department stores, catering and food remained dull. 3Q2018 added 8 new auto stores, including 3 4S stores, 4 maintenance service stores, 2 comprehensive maintenance centers, and 2 new food stores. During the reporting period, the company's auto business continued to grow so far this year, with revenue up 7.54% year-on-year and gross profit margin up 1.26% year-on-year, offsetting the negative impact of the company's department store and catering business revenue on overall revenue.

Maintain profit forecast and maintain "overweight" rating

The performance of the company's department store is lacklustre, and the future performance growth is expected to be mainly driven by the orderly automobile business of the exhibition store. We maintain the forecast for the company's fully diluted EPS of 0.54 / 0.60 EPS for 2018-2020, respectively, and maintain the "overweight" rating.

Risk Tips:

The auto business was lower than expected, and the performance of mid-and high-end department stores was lower than expected.