Limited service hotel revenue for the first quarter of 2019 fell short of expectations due to RevPAR's poor performance. The company's main hotel operating subsidiary recorded net revenue of RMB 3,337 billion in the first quarter of 2019, an increase of 2.7% year-on-year, lower than our expectations. Despite the increase in the proportion of mid-range hotels (up 8.6 percentage points year on year), the higher overall average daily room rate was not as good as the overall occupancy rate, and the subsidiary's domestic hotel complex RevPar fell 4.2% year on year. The subsidiary falls short of its main competitor Huazhu Hotel Group (HTHT US) in terms of RevPAR growth. In the first quarter of 2019, adjusted operating profit increased 6.0% year over year to RMB 115 million, lower than our expectations, while profit margin increased 0.1 percentage points year over year. Mid-tier brands showed greater resilience to risk in the first quarter of 2019. Mature mid-range hotels in subsidiaries are more resilient to risk than mature budget hotels. The former RevPar fell 1.2% year on year, while the latter RevPar fell 6.9% year on year. We lowered our 2019 to 2021 revenue forecasts by 3.5%, 6.2%, and 8.4%, respectively, to reflect our expectations of a future decline in RevPAR. We expect total revenue from 2019 to 2021 to be RMB 21.3 billion, RMB 22.7 billion, and RMB 24.2 billion, respectively, with a compound annual growth rate of 5.5%. We expect adjusted EBITDA from 2019 to 2021 to be RMB 3.710 billion, RMB 3,810 billion, and RMB 3,918 billion, respectively, corresponding to growth rates of 0.7%, 2.7%, and 2.8%, respectively. The “Collection” rating was maintained, but the target price was lowered from HK$2.15 to HK$2.05. Our target price is equivalent to 7.2 times the 2019 adjusted EV/EBITDA and 11.1 times the 2019 price-earnings ratio.