Strategic focus, digital upgrading, and continuous improvement in profitability. Companies that were first given an “increase in holdings” rating are traditional retail leaders in the central and western regions of China. In 2010, they began to increase investment in the department store industry and vigorously develop e-commerce business, but did not pay enough attention to the operation of the main supermarket business, which led to pressure on net profit in 2013-2016 due to increased cost rates and net profit. Beginning in 2018, the company began collaborating by introducing strategic investors such as Tencent and JD to improve omni-channel operation efficiency through its excellent digital operation capabilities. On the other hand, it divested the business in the Chongqing region, returned to operations in advantageous regions such as Hunan, and dug deeper into the potential of the county market. Net profit from the head office recorded continuous positive growth in 2018-2019. With the consolidation and implementation of the focused strategy, we believe that the company's profitability is expected to continue to recover. The company's 2020E-202E EPS is expected to be 0.28, 0.37, and 0.45 yuan, respectively, with a target price of 10.36 yuan, giving it an “increase in holdings” rating for the first time. The strategy focuses on the strategic exit from the Chongqing market, taking advantage of the mixed reform to strategically exit the Chongqing market. In 2013-2019, Backgammon accumulated losses of 435 million yuan in the Chongqing region. It participated in the mixed ownership reform of Chongqing department stores in June 2019, and used this opportunity to strategically exit the Chongqing market. In the future, the company will continue to focus on the leading Hunan market to ensure the steady growth of supermarkets and department stores; the relatively leading Guangxi and Jiangxi markets, with the supermarket business format as the core, guarantee the team's full authorization and promote the efficient implementation of the strategy; while the Sichuan region will avoid the Red Flag Chain and the advantageous regions where Yonghui supermarkets are located, focus on the southern Sichuan market. Judging from the business format, supermarkets are the focus of the company's future expansion, and the department store business is dominated by stock operations. Focusing on digitalization, the acceleration of online and offline integration, the transformation to smart retail is to solve the pain points of slow information transmission and low operational efficiency in the traditional retail industry. The company began digital experiments in 2013 and launched services such as Cloud Monkey e-commerce and Cloud Monkey global shopping one after another, but the transformation did not go smoothly due to problems such as the fragmentation of online and offline business. Since 2017, the company has returned to the essence of retail and promoted the integration of online and offline business. On the one hand, the company transforms customers from offline to online and offline omni-channel users through digital membership, and explores customer value through private traffic operations; on the other hand, it establishes new organizational operation models, such as dynamic employment and management partnership mechanisms, to improve human efficiency and generate revenue. Focus on the supply chain, promote the efficiency of the whole chain with fresh products as the core, and improve the efficiency of the whole chain. Fresh, naturally, has traffic attributes and is the core category of the supermarket business. At the beginning of 2019, the company began to focus on fresh food and “control the pricing power of the fresh food market” as its strategic position, deepening supply chain transformation around back-end procurement, central office coordination, and front-office operations to achieve integration and upgrading from all aspects of the supply chain. As of 2019, the penetration rate of fresh products in the company's stores has increased to 40%, and the coverage of standard vegetable and fruit parts has reached 98.3% and 86.5% respectively; in 2019, fresh sales in the company's supermarket business increased 18.2% year-on-year. It is optimistic that profitability will be further restored. For the first time, it has given a solid foundation in offline retail to “increase in holdings” rating companies. Digital transformation and supply chain upgrades are expected to drive net interest rates back to historical levels. We expect net profit to reach 250, 3.2, and 380 million yuan in 2020-22, corresponding to EPS of 0.28, 0.37, and 0.45 yuan. Referring to similar company Wind's unanimous forecast for 2021, the average average is 26.1x PE. Considering that the company's digital upgrade remains leading in the industry, it will show greater profit elasticity compared to peers after cost reduction and efficiency, and the company's store base is relatively small, so the growth rate is expected to be faster. The approval was given to the company 28 x PE in 2021, with a target price of 10.36 yuan, covering the “increase in holdings” rating for the first time. Risk warning: The epidemic is repeated, the transformation of the fresh supply chain falls short of expectations, and the digital upgrade falls short of expectations.