This report is read as follows:

As a multi-plate business group, in recent years, the proportion of clothing sales has increased, the efficiency of store expansion has been improved, and the performance of the real estate sector has been sound, giving prudent overweight ratings for the first time.

Main points of investment:

For the first time, coverage gives a cautious overweight rating: it is estimated that the EPS for 2019-2021 will be 0.840.93max 1.02 yuan, an increase of 14%, 11% and 10% over the same period last year. With reference to the valuations of the same brand clothing companies and real estate enterprises, the company will be given a target price of 7.09 yuan, corresponding to about 8 times PE in 2019.

Multi-plate business groups, steady real estate sales, clothing share increased. The company has clothing, real estate, financial investment a number of business sectors. Among them, the existing real estate projects sold well, the overall presale ratio reached 82.89%, and the sales landed in accordance with the plan. The project is rich in reserves, the coverage area is broadened, and the long-term sustainable development is guaranteed. In recent years, the scale of clothing sales has expanded, the proportion has begun to pick up, and the focus of business has gradually shifted.

Expand stores to improve store efficiency, consolidate the advantages of direct channels, clothing marginal improvement is significant. The company's offline stores returned to growth, with a net increase of 76 to 3101 in 2018. Thanks to the big store strategy, the store area has expanded, the average store area has reached 132.8 square meters, the store efficiency has improved synchronously, the average store sales has reached 1.6496 million yuan in 2018, and the quality of single stores has been continuously optimized. Offline stores are mainly direct channels, and the number of direct stores further increased to 2896 in 2018, accounting for 93.39%, increasing 3.24pct compared with the same period last year. The construction of digital stores has been accelerated, online and offline, and omni-channel O2O operation has landed. The intelligent production line has been put into production, the production efficiency has been increased by 25%, the production cycle of large goods has been shortened to 32 days, and the efficiency of the fast reaction system and the supply chain has been greatly improved. Cultivate a new generation of customers, the rapid rise in the number of full-brand members, global drainage, precision marketing, clothing business recovery.

Catalyst: growth of offline clothing stores, implementation of big store strategy, improvement of store efficiency.

Risk tips: clothing consumption, real estate sales, investment income is lower than expected.