The company introduced Beigaofeng Capital as a long-term strategic partner through an equity agreement transfer, which is expected to help the company carry out full-link digital reforms, including design/production/sales, and achieve accurate contact with consumer needs. Currently, the company's total market value is 5.5 billion yuan, corresponding to 20PE26X. In the short term, the valuation is not low. In the long run, the company is in the second tier after Belle Series. The team's ability to operate is at the leading level in the industry, and it can still maintain relatively stable and healthy operations during industry adjustments. The synergy benefits with Xiaozi Technology in terms of precise marketing are expected to be further exploited and maintain a “Prudent Recommendation -A” rating. Introducing North Peak Capital as a long-term partner. Visions Holding, a wholly-owned subsidiary of Beigaofeng Capital, invested 186 million yuan to transfer a total of 5% of the company's shares in Hong Kong Gaochuang and Pingtan, the majority shareholders of the company, at a transfer price of 8.64 yuan/share. Dr. Min Wanli is the founder of Beigaofeng Capital. He was the chief scientist of Alibaba Cloud Intelligence. He has a background and experience in digital and artificial intelligence. During his tenure at Ali, he helped traditional enterprises carry out digital transformation projects. The company has a complete design, production and sales chain layout of fashion women's shoes, and is still in the optimization and adjustment stage. In the first three quarters of 2019, the company's women's shoes business fell 1.58% year on year to 1,232 billion yuan, of which online business revenue accounted for 17.7%, up 30% + year on year; offline business fell 6.5% and is still in a state of optimization and adjustment. At the end of 2019Q3, the number of the company's offline stores reached 1,791, a decrease of 134 from the beginning of the year. Beigaofeng Capital is expected to help the company achieve full-link digital transformation, maximize the distance between products and consumers, and reduce costs and increase efficiency. Fashion women's shoe retail often uses production and sales methods, which have the pain points of inefficiency and high cost. After cooperating with Beigaofeng Capital, the company will apply big data technology on the sales side to form consumer portraits, match users' needs to the company's products, carry out accurate promotion, and shorten the distance between the company and consumers. On the manufacturing side, product elements such as heel height, toe type, color matching, and jewelry are digitally processed, and popular elements are collected from them to guide design and shorten the R&D cycle. At the same time, it can also optimize supply chain layout and improve supply chain response efficiency. After 2019, Kid Technology will explore the short video commercialization business, which is expected to form a collaboration with the company's main retail business. Xiaozi Technology was previously involved in mobile advertisement distribution. Considering that mobile internet traffic has now entered the stock game stage, it began exploring the short video commercialization business in 2019. By purchasing copyrights for high-quality variety shows, the program is split into small videos to be used as advertising carriers, and displayed on app clients such as Today's Headline/Tencent AppBao. In the future, Kid Technology will combine Tianchuang's consumer profile data to help the company achieve accurate advertising on the marketing side and improve sales conversion rate and customer stickiness. Profit forecast and investment rating: Considering factors such as the adverse impact of the pandemic on women's shoe sales and the increase in Xiaozi Technology's investment in business transformation expenses this year, the company fine-tuned the company's 2019-2021 EPS forecast of 0.52, 0.49, and 0.52 yuan, respectively. The current market value is 5.5 billion, corresponding to the 2020 PE26X. In the short term, the valuation is not low. In the long run, the company is in the second tier after Belle Series. Team operation capabilities are at the leading level in the industry, and can still maintain relatively stable and healthy operations during industry adjustments. The synergy benefits with Xiaozi Technology in precision marketing are expected to be further exploited and maintain a “Prudent Recommendation - A” rating. Risk warning: Affected by the domestic macroeconomy, there is a risk that the growth rate of fashion consumer demand will slow down.