The revenue of 1H2019 company decreased 5.28% year on year, net profit decreased 4.63% year on year. The company released the 2019 interim report: 1H2019 achieved operating income of 6.403 billion yuan, a year-on-year decrease of 5.28%; realized net profit of 67.84 million yuan, which was converted to a fully diluted EPS of 0.13 yuan, a decrease of 4.63%, and achieved net profit of 59.14 million yuan, a year-on-year increase of 2.51%, and performance slightly lower than expected. The same decline in the company's net profit to the parent was mainly affected by non-recurring profits and losses such as compensation and fines in the current lawsuit. Looking at the quarterly split, 2Q2019 achieved operating income of 2,790 billion yuan, a year-on-year decrease of 5.22%; realized net profit of 1,6881 million yuan, while the 2Q2018 company achieved net profit of 5.812,600 yuan; net profit deducted from non-return of the mother - 2,3618 million yuan; and 2Q2018, the company achieved net profit of 892,700 yuan. The consolidated gross margin increased by 0.95 percentage points, and the expenses ratio for the period increased by 0.90 percentage points. The consolidated gross margin of the 1H2019 company was 19.91%, up 0.95 percentage points from the same period last year. The 1H2019 company's period expense ratio was 17.12%, up 0.90 percentage points from the same period last year. Among them, the sales/management/finance expense ratio was 12.47%/2.38%/2.27%, respectively, which changed -0.07/ 0.31/0.66 percentage points from the same period last year. The level of competition in the regional market has intensified, and the revenue side is expected to continue to be under pressure. In the second quarter, the company closed 1 supermarket store in Jinan and 2 in Weifang. As of the end of the reporting period, the company had 130 stores and was entrusted with the management of 47 unlisted stores. The company's revenue side performance was lackluster in '19, mainly affected by factors such as increasing competition in Shandong Province and the gradual adjustment of the company's operations under severe circumstances. The decline in the company's revenue in the quarter was slightly narrower than in the first quarter, and is expected to be under great pressure throughout the year. Lower the profit forecast and maintain the “increased holdings” rating. The company's revenue side performance was lackluster. We lowered our forecast for the company's fully diluted EPS in 19-21 to 0.09/ 0.09/ 0.10 yuan (previously 0.10/ 0.10/ 0.11) yuan, respectively. The company's net market ratio is low, and local state-owned enterprises with small market capitalization may benefit from national reform expectations and maintain the “increase in holdings” rating. Risk warning: The level of regional competition has been further strengthened, and the cultivation of new stores has taken longer than expected.