With the opening of a new store, revenue grew steadily, and net profit from acquisition integration decreased by 48.78% year-on-year. The company released its 2018 annual report: it achieved total revenue of 11.414 billion yuan (+8.15%) for the whole year; realized net profit of 202 million yuan (-48.78%), equivalent to an EPS of 0.23 yuan/share. The increase in the company's revenue was mainly due to the year-on-year increase in the operating income of the company's original regional stores and the increase in revenue after the company's acquisition of Lotte Shopping's East China regional store (which has been renamed Liqun Era) and reopened. Among them, the revenue of the company's original regional stores increased by 253 million yuan, up 2.40% year on year, and Liqun Times Store increased revenue by 607 million yuan in 2018. In terms of net profit, the company's net profit in 2018 fell by 48.78% year on year, mainly due to the acquisition of Lotte stores that began opening one after another in August. Revenue and expenses did not achieve an effective ratio, leading to a year-on-year decline in the company's net profit. In 2018, Liqun Times stores achieved net profit attributable to the parent company - 235 million yuan; excluding factors such as the increase in the cost of acquiring Lotte Shopping East China stores, the company's original regional stores achieved net profit attributable to the parent company of 435 million yuan, an increase of 10.37% over the previous year. Gross margin increased slightly. Expenses increased 4.19 pct compared to 2017. The company's gross margin in 2018 was 22.45%, up 2.49pct from 2017. In terms of costs, the fee rate for the full year of 2018 was 18.21%, an increase of 4.19 pct over 2017. Among them, the sales expense ratio was 12.06%, up 2.63 from 2017; the management expense ratio was 5.51%, up 1.61 pct from 2017; and the financial expense ratio was 0.64%, down 0.05 pct from 2017. The focus of operations is further skewed towards supermarkets, and the retail industry, which has maintained a “recommendation” rating, has been under pressure for many years. The current consumption of daily necessities, fresh food, etc. supports the continuous improvement of supermarket revenue growth over department stores. With the acquisition of 72 stores in East China by Lotte Shopping in 2018, the company expanded its business area significantly, from covering the Shandong and Jiangsu regions to the three regions of Anhui, Zhejiang and Shanghai. By the end of 2018, the company's new business formats mainly focused on supermarkets and fresh convenience store models. Through the rapid and centralized opening of a large number of stores, the revenue contribution of supermarkets was increased, and the coverage area outside the province was increased. The company continues to be deeply involved in the supply chain and logistics and warehousing system, and teamed up with SAP and Tencent to build a smart supply chain information management system. With the rapid increase in business scale, it is expected that the company's gross profit will be further optimized and operating efficiency will be improved. A large number of new stores were quickly put into operation, which will drag down the company's profit growth rate during the integration period, but the company's business model is mature and replicable. With the stable operation of stores, the supermarket's profit contribution is expected to show. Considering the impact of Rakuten's integration on profits, we lowered the company's EPS in 2019-2021 to 0.34 (-0.2) /0.43 (-0.17) /0.48 yuan, respectively, to maintain the “recommended” rating. Risk warning: macroeconomic risk; downside consumption risk; the company's new store opening falls short of expectations