1-3Q2019 revenue decreased 4.50% year over year, net profit increased 33.18% year over year, 1-3Q2019 achieved operating income of 9.212 billion yuan, a year-on-year decrease of 4.50%; realized net profit of 48 million yuan, converted to fully diluted EPS of 0.09 yuan, an increase of 33.18% year over year; achieved net profit of 34 million yuan, an increase of 107.77% year-on-year, exceeding expectations. Looking at the quarterly split, 3Q2019 achieved net income of 2,809 billion yuan, a year-on-year decrease of 2.65%; realized net profit of -20 million yuan, converted to fully diluted EPS of -0.04 yuan, while 3Q2018 achieved net profit of -35 million yuan; realized net profit deducted from non-return net profit of -225 million yuan, while 3Q2018 achieved net profit of -225 million yuan. The consolidated gross margin increased by 1.14 percentage points, and the expenses ratio for the period increased by 0.54 percentage points. The consolidated gross margin of the 1-3Q2019 company was 20.40%, up 1.14 percentage points from the previous year. The 1-3Q2019 company's expenses for the period were 17.94%, up 0.54 percentage points from the previous year. Among them, the sales/management/finance expense ratio was 13.21%/2.40%/2.33%, respectively, and the year-on-year change was -0.36/0.26/0.64 percentage points. Operation adjustments have led to a narrowing of revenue decline and performance recovery. 3Q2019 companies have opened/closed 1 new supermarket store each, and the total number of stores has not changed. Competition in the retail market in Shandong Province is fierce. Competitors such as Liqun Co., Ltd. and Jiajiayue have strong management capabilities, putting some pressure on the company's department store and supermarket business. In the face of increasingly severe competition, the company continued to push forward with operational adjustments. The decline in 3Q2019 revenue narrowed somewhat. The gross margin of all business formats increased to varying degrees. The cost rate during the 3Q2019 period also fell 0.35 percentage points year-on-year, and the effects of the adjustments were beginning to show. Raise the profit forecast and maintain the “increase in holdings” rating. Taking into account the narrowing of the company's revenue side decline and the improvement in cost control capabilities, we raised our forecast of the company's fully diluted EPS in 19-21 to 0.10/ 0.11/ 0.12 yuan (previously 0.09/ 0.09/0.10 yuan). The company is a leading retail company in Shandong Province. As a local state-owned enterprise with a small market capitalization, it may benefit from state-owned enterprise 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.