The 3Q19 performance fell short of market expectations. The company announced the results of the 2019 three-quarter report: from January to September, it achieved revenue of 2,915 billion yuan (+2.4%), net profit of 15.07 million yuan (+12.4%); 3Q19 single-quarter revenue was +2.7%, and net profit loss in the single quarter increased to 29.41 million yuan year-on-year. Since there was no significant acceleration in off-season revenue performance, the performance performance fell short of market expectations. Development trend 3Q19 stores performed lackluster, and new channels maintained rapid growth. The company's 3Q19 revenue also increased by 2.7%. The off-season revenue performance was lackluster, and no significant acceleration was achieved. By the end of the third quarter of 2019, the company's total number of stores had increased by 3.1% to 2,746, a net increase of 83. Among them, the revenue of direct-run stores was -0.38% year-on-year, and the revenue of franchise stores was +3.07% year-on-year. We believe that the performance of stores in both showrooms and the same stores was relatively lackluster. E-commerce revenue is +19.33% year over year, and special channel group purchase revenue is +16.15% year over year. We believe that the company's new channels will maintain rapid growth, but overall growth is lower than market expectations due to slow store growth. We judge that the company's omnichannel strategy has been basically adjusted. We expect that the 4Q19 company's revenue may benefit from the early Spring Festival and achieve accelerated growth. Currently, the company has announced a cooperation framework agreement with Fangyuan Jinding Industrial Fund. We judge that in the future, the company is expected to accelerate expansion through external forms such as investment and mergers and acquisitions within the same industry. The 3Q19 gross margin was under pressure year on year, and the expense ratio continued its downward trend. The company's 3Q19 gross margin was 44.8%, -1.7ppt compared to -1.7ppt, mainly because the scale effect of costs during the off-season was difficult to reflect. At the same time, the growth rate of new channels with relatively low gross margin levels, such as e-commerce and special channels, was faster than the company's overall growth rate, so it had an effect on reducing gross margin. The 3Q19 sales expense ratio is 34.5%, compared to -1ppt. We believe that the company has already invested in systems such as the omni-channel system and business center in the early stages, so the current cost rate will benefit from the relative reduction in cost investment and scale effects to achieve a year-on-year decline. Profit forecasts and valuations were lowered by 8.6/ 9% to 0.28/0.34 yuan in the 2019/2020 EPS forecast, mainly due to lower 3Q19 results than expected. Since the company's profit margin has not yet returned to normal levels, using the P/S valuation method, the company's current stock price corresponds to 0.89/0.76 times P/S in 2019/2020, and the target price was lowered 8% to 14 yuan, corresponding to 1.1/0.95 times P/S in 2019/2020. The current stock price still has 25% room to maintain a neutral rating. Increased competition in risk markets, risk of regional expansion, risk of franchisee management, and risk of food safety.