The revenue of the 1H2019 company increased 6.95% year on year, and net profit fell 16.56% year on year. 1H2019 achieved operating income of 5.963 billion yuan, an increase of 6.95% year on year; realized net profit of 137 million yuan, converted to fully diluted EPS of 0.18 yuan, a decrease of 16.56% year on year; achieved net profit of 105 million yuan, a year-on-year decrease of 32.75%; performance fell short of expectations. There was a significant decline in the company's net profit from the parent company, mainly due to increased competition in the regional market and the confirmed investment loss of 40.31 million yuan by Huarong Consumer Finance Company, in which the company participated. Looking at the quarterly split, 2Q2019 achieved operating income of 2,432 billion yuan, an increase of 3.34% over the previous year; realized net profit of 16.6 million yuan, a year-on-year decrease of 66.95%; and realized net profit of 4.82 million yuan after deducting non-return mother's net profit of 4.82 million yuan, a year-on-year decrease of 89.43%. The consolidated gross margin increased by 1.72 percentage points, and the expenses ratio for the period increased by 0.38 percentage points. The consolidated gross margin of the 1H2019 company was 20.29%, up 1.72 percentage points from the same period last year. The 1H2019 company's period expense ratio was 13.26%, up 0.38 percentage points from the same period last year. Among them, the sales/management/finance expense ratio was 4.14%/8.91%/0.21%, respectively, and 0.11/ 0.09/0.18 percentage points from the same period last year. Supermarkets tested the waters of the franchise model. Losses of participating companies dragged down performance as of the end of the reporting period. The company operated a total of 236 department stores, supermarkets, and home appliances. The company's supermarket business has started a franchise model. Currently, it has opened 5 franchise stores. Since franchise stores are still in the early stages of development, only franchise fees are currently collected from franchisees. Franchise store sales are not included in the company's revenue. When the company starts the franchise model, strengthening its long-term competitive advantage still needs to be further judged in light of future showroom and revenue conditions. Huarong Consumer Finance Co., Ltd. and Anhui Airport Baidaxing Cross-border E-commerce Co., Ltd., in which the company participated, caused investment losses of 40.31 million yuan and 3662 million yuan respectively, which dragged down the company's performance. Lower the profit forecast and maintain the “increased holdings” rating. The company's main retail business is affected by macroeconomic uncertainty and increased regional market competition. Facing revenue growth pressure and cost pressure, we lowered our forecast for the company's fully diluted EPS in 19-21 to 0.25/ 0.30/ 0.31 yuan (previously 0.31/ 0.33/ 0.35 yuan). The company's net market ratio was low, maintaining the “increase in holdings” rating. Risk warning: The business area is concentrated, and the length of the incubation period for new stores has exceeded expectations.