The Worst Stage Of The Stock Market Has Passed.

A quarterly disclosure yesterday was in line with our earlier expectations: Q1 revenue was 32 billion 700 million, down 21% compared to the same period last year; operating profit was 04 billion, down 357% compared to the same period last year; net profit attributable to parent company owners was 036 billion, down 416% over the same period last year.

At the same time, the company expects that the net profit attributable to parent company owners in 15 to 1-6 months will be 388 billion 700 million to 680 billion 300 million, down 60%-30% from the same period last year.

We believe that the worst stage of the company has passed, the income decline has narrowed and the gross profit margin has remained relatively stable.

Q1 gross margin was 584%, unchanged from the same period last year.

The sales cost increased by 93% to 10 billion 700 million compared with the same period last year, and the management cost increased by 41% to 040 billion compared with the same period last year. The sales expense rate plus the management fee rate increased 449%, up 41 percentage points from the same period last year. The organizational restructuring of the company was basically in place. The increase in labor cost brought by the introduction of high-end talents is coming to an end, and the effect of controlling the cost of the company gradually appears.

The financial cost is 4 million 650 thousand, an increase of 62841% over the same period last year. The reason is to pay interest on bank loans and no bank loans in the same period last year.

The increase in the three costs resulted in a 357% decrease in Q1 operating profit over the same period.

Sexual cash flow has been greatly improved.

Q1 net operating cash flow of 11 billion 900 million, an increase of 1595% over the same period last year, accounts receivable 100 million of the 2890% stake, Lianzhong international as the second largest online chess game operators, with the authenticity of the Internet gene, is an important step in the company's entry into the Internet industry, the company will help Lianzhong international O2O chess game traffic entrance, to create online and offline resources linked three-dimensional fashion ecosystem.

Since then, the company has achieved three linkage layout, becoming the first enterprise in the A share market consumer goods field to have three capital market operation capability.

Investment recommendations: maintain recommended ratings.

We estimate that in 2015, the scale of revenue was 133 billion 400 million, the growth rate was 8%, the net profit scale was 1 billion 400 million, the growth rate was 164%, EPS071 yuan, and the current market value was 7 billion 400 million.

Since our initial recommendation, the company's share price rose significantly, taking into account the company's acquisition of Lianzhong international, three capital

Beyond our expectations, the continued integration of cross-border capital advantage will continue to maintain the recommended rating.