Wenjing Real Estate confirmed revenue of about 100 million yuan, with a single quarter profit increase of 33.5%. Wenfeng Co., Ltd. achieved revenue of 2.32 billion yuan in 1Q14, an increase of 10.4% over the previous year; net profit attributable to the parent company was 137 million yuan or EPS = 0.18 yuan, an increase of 33.5% over the previous year. Among them, Wenjing Real Estate confirmed sales revenue of about 100 million yuan and contributed about 20 million yuan to net profit. After excluding this influence, pure retail business revenue increased by about 5.5% in a single quarter, and net profit increased by about 14% year on year, slightly exceeding expectations. In 1Q14, gross margin increased 2.21 percentage points year over year to 18.75% (mainly due to real estate revenue recognition), the sales+ management expense ratio increased 0.07 percentage points year over year to 7.94%, and net operating cash flow was 40 million yuan, a year-on-year decrease of 110 million yuan, mainly due to an increase of 65 million yuan in construction payments, a decrease of 21 million yuan in advance housing payments, and a decrease of 29 million in prepaid cards. To a certain extent, this also reflects the negative impact of strict anti-corruption policies on operations. 2014 outlook: Deeply involved in Nantong and integrated into Shanghai, the O2O transformation company opened a new 36,000-square-meter Lianyungang Xugou Wenfeng Grand World in January, and the 10,000-square-meter Wenfeng City Plaza in Nantong is also expected to open in the first half of the year. Furthermore, projects such as Haimen New Store, Qidong Phase II, Rugao Baipu Store, Rugao Wenfeng City Plaza, Shanghai Kongjiang Road Shopping Center, and Songjiang Shopping Center are all in steady preparation. While deepening the Nantong region, they are also trying to integrate into the Shanghai market. In addition to expanding physical channels, the company is also actively building the next-generation O2O online shopping platform “Love Above Peak”. Profit forecasting and valuation discussions took into account the economic environment that is still sluggish, the upcoming opening of the large-scale project of Wenfeng City Plaza in Nantong, and the relay of several subsequent reserve projects, and the 14-16 EPS forecast was 0.61, 0.62, and 0.70 yuan (retail business EPS was 0.56, 0.62, and 0.7 yuan, respectively; real estate contributed about 0.05 yuan in 2014 (confirmed 0.03 yuan in 1Q14). Due to the uncertainty of real estate revenue confirmation, it will not be considered for the time being Profit forecasting in progress). The current price corresponds to the 14-year overall valuation of about 11.4XPE, maintaining a “cautious increase” rating. Risk warning: The pace of epitaxial expansion is lower than expected; real estate revenue confirmation is lower than expected.