The company's 1-3Q2018 revenue increased by 4.85% over the same period last year, and the company's net profit increased by 18.06% over the same period last year. On the evening of October 19, the company announced that 1-3Q2018 realized operating income of 1.905 billion yuan, an increase of 4.85% over the same period last year, and realized net profit of 61.79 million yuan, equivalent to 0.22 yuan of fully diluted EPS, an increase of 18.06% over the same period last year. The net profit was deducted from 64.39 million yuan, an increase of 14.99% over the same period last year.

In a single quarter, the company's 3Q2018 achieved operating income of 629 million yuan, an increase of 6.39% over the same period last year, and a net profit of 22 million yuan, an increase of 22.58% over the same period last year.

The comprehensive gross profit margin decreased by 0.85%, and the expense rate decreased by 1.41% during the period. 1-3Q2018's comprehensive gross profit margin was 19.12%, down 0.85% from the same period last year.

The period expense rate of 1-3Q2018 company was 13.72%, down 1.41% from the same period last year, of which the sales / management / financial expense rate was 1.99% / 11.91% /-0.19% respectively, and the year-on-year change was-0.19% /-1.00% /-0.22% respectively.

Transform the main stores into department store-type shopping centers, or increase the proportion of catering and experiential formats or the company's board of directors decided to invest 120 million yuan in the upgrading project of ZTE headquarters, including 7F and 8F-10F (Fangcheng). The company believes that at present, there are some gaps in the layout of experiential formats such as catering, children's parents and children, entertainment and leisure, and this transformation advocates to increase the proportion of the above two formats and enhance the differentiation and overall competitiveness of the head store in Taiyuan Street.

The construction period of this transformation is 12 months, that is, from October 2018 to October 2019. It is expected that the ZTE store will be improved in terms of customer collection capacity, retention capacity and profitability to a certain extent after the transformation is completed. However, in the regional economic environment where the company is located and the dull overall attractiveness of Taiyuan Street, the effect of the transformation remains to be seen.

Maintain profit forecast and maintain "overweight" rating

We maintain the forecast of the company's overall diluted EPS of 0.33 / 0.35 / 0.37 yuan for 18-20 years, and maintain the "overweight" rating.

Risk Tips:

Consumer demand falls short of expectations, and major shareholders reduce their holdings.