Key investment points: The company's performance has remained stable, and the main footwear business has stabilized, which is basically in line with expectations. 1) The first three quarters of 2019 achieved operating income of 1.51 billion yuan, an increase of 2.9% over the previous year; net profit of 170 million yuan was realized, a decrease of 7.9% over the previous year, and net profit of 160 million yuan after deducting non-net profit of 160 million yuan, a decrease of 3.0% over the previous year. 2) 19Q3 achieved revenue of 4.7 billion yuan, a slight decrease of 0.1% from the previous year, net profit of 50.68 million yuan, an increase of 5.1% over the previous year, and net profit of 42.63 million yuan after deducting non-net profit of 42.63 million yuan, an increase of 33.4% over the previous year, continuing the good recovery momentum in the second quarter. 3) Among them, the main footwear business achieved revenue of 1.23 billion yuan in the first three quarters of 19 years, a year-on-year decrease of 1.6%; in the Q3 single quarter, the revenue of the main footwear business was 360 million yuan, a year-on-year decrease of 3.7%, mainly due to the continuous optimization of offline stores, the closure of poorly operated stores, and improved operating efficiency. Gross profit margin and net interest rate declined slightly, period expenses were well controlled, and asset quality was healthy. 1) The decline in gross margin led to a decline in net interest rate. The gross margin for the first three quarters of the year 19 fell 2.0pct to 54.4% compared to the same period last year, mainly due to the increase in the share of mobile Internet media advertising in Xiaozi Technology's medium and low margin, which led to a decline in overall gross margin. The sales expense ratio decreased by 0.3 pct to 27.8%, and the management expense ratio (including R&D expenses) decreased by 0.3 pct to 13.0%. Net interest rate decreased by 1.4pct to 11.5% compared to the same period last year. 2) Asset quality remains good. Accounts receivable for the first three quarters of 2019 decreased by 51.19 million yuan to 270 million yuan from the beginning of the year, and inventory decreased by 2.97 million yuan to 480 million yuan from the beginning of the year. Operating cash flow for the first three quarters of '19 was 200 million yuan, a decrease of 43.3 million yuan from the same period last year. Overall asset quality was relatively good. Offline stores continue to adjust, and the e-commerce recovery trend continues to strengthen. 1) Continuously optimize the offline channel structure and optimize or close inefficient stores. As of the end of the first three quarters of the year 19, the total number of stores of the company was 1,791, a decrease of 134 from the beginning of the year, of which 1,270 were directly managed stores (accounting for 71%), a net clearance of 202, 521 franchise stores (29%), and a net clearance of 67. 2) Active adjustments online, and the recovery trend is obvious. In the first three quarters of 2019, we achieved online revenue of 220 million yuan, an increase of 30.9% over the previous year. Online revenue accounted for 17.7% of revenue, an increase of 4.4 pct over the same period last year, a significant increase. Among them, e-commerce revenue for the third quarter alone was 58.58 million yuan, up 45.2% year on year. The growth momentum is strong, and Q4 is still expected to maintain a high growth rate. Xiaozi Technology continues to grow rapidly and is actively developing new businesses. 1) The scale of Xiaozi Technology's business continues to grow rapidly. In the first three quarters of 2019, Xiaozi Technology achieved revenue of 280 million yuan, an increase of 29.6% over the previous year, and continued to grow rapidly. It is expected that it will basically achieve the net profit promised in 2019 (110 million yuan). 2) The expansion of new business has led to a decline in gross margin. In order to cope with increasingly intense competition in mobile marketing, Xiaozi Technology is actively developing new businesses, including helping advertisers such as large apps awaken sleeping users to reactivate, and arranging the applet business to enter the WeChat ecosystem. However, due to the low gross margin of the new business, Xiaozi Technology's gross margin fell 3.7 pct to 38.8%. The company is a leading enterprise in the women's shoes industry. The offline channel structure continues to be optimized, the online growth is rapid, the performance is relatively steady, and the “increase in holdings” rating is maintained. The company's offline stores were gradually adjusted to strengthen store efficiency, optimize the supply chain, and reduce costs and increase efficiency. After online adjustments, the recovery momentum is strong. The performance in 19Q3 was impressive, and growth will continue at a rapid pace in the fourth quarter. In view of the continuous optimization and adjustment of offline channels, the original profit forecast was slightly lowered. The estimated net profit for 19-21 was 2.5/28/300 million yuan (originally 2.6/29/3.3 billion yuan), corresponding to EPS of 0.58/0.64/0.70 yuan, and PE 13/11/10 times, maintaining the “increase in holdings” rating.