Predicting an 87-90% year-on-year decline in profit, the company issued a performance forecast. Net profit for 2018 fell 87%-90% year-on-year, corresponding to 4Q18 losses of 410,000 to 3.41 million. The quarterly losses narrowed month-on-month, but were still lower than our expectations, mainly due to the company's continued high expenses to cope with the tightening competitive environment in the industry. At the same time, the company issued a repurchase plan, which is intended to be used in the company's employee stock ownership plan or equity incentive plan. It plans to repurchase no less than 2.5 million shares through centralized bidding transactions, with an upper limit of no more than 5 million shares, and a repurchase price of no more than 16.26 yuan/share. Key points of interest The competitive environment in the industry is getting tighter, and the company's revenue is growing steadily, but expenses are high. According to grassroots research, although the number of stores opened by the company in 2018 fell short of the target at the beginning of the year (3,300), the revenue side still benefited from the increase in the number of stores and the same store growth in mature stores to achieve double-digit growth, which is in line with our expectations. Since the snack food industry has good market prospects but a tightening competitive environment, the company began to focus on strengthening omni-channel construction, new market layout, investment in information and management technology, and introduction of senior technical management personnel in various fields in 2H17, thus making sales expenses and management expenses high. We expect sales expenses and management expenses to be high. We expect the sales expenses rate to reach about 32% in 2018, while the management expenses rate is as high as 12%, dragging down profit performance in 2018. Expenses may be high in '18, and more emphasis will be placed on profit growth in '19. Since the company focused on scale expansion, new regional markets, and increased e-commerce investment in 2018, and increased costs and expenses, the profit performance continued to fall short of expectations. We expect that the company will gradually shift from focusing on revenue growth to focusing more on profit growth in 2019. Although the revenue side may not meet the previous equity incentive target (revenue increased 16%/19% in 18/19), the company will be more demanding in terms of product structure, store growth, and cost control. The company plans to launch a repurchase, which reflects management's confidence in long-term development. We believe that the repurchase plan reflects the recognition of the company's internal value by management and major shareholders, helps bind the interests of employees and the company's long-term development, and looks forward to subsequent performance recovery. The valuation and recommendations were mainly due to high costs that dragged down the 2018 performance, and adjusted the 2018/19/20 profit forecast -79%/-74%/-56% to 0.03/0.05/0.1 yuan. Since the company's profit margin has not returned to normal levels, we used the P/S valuation method. The company's current stock price corresponds to 0.84/0.72/0.6 times P/S in 2018/19/20, giving 0.8 times P/S in '19, and lowering the target price by 9% to 11.4 yuan. The current stock price still has 11% room to maintain a neutral rating. Increased competition in risk markets, risk of regional expansion, risk of franchisee management, fluctuations in raw material prices, food safety risks.