[Important Notice](index=3&type=section&id=Item%201.%20Important%20Notice) [Guarantee of Report Authenticity and Completeness](index=3&type=section&id=1.1%20Guarantee%20of%20Report%20Authenticity%20and%20Completeness) Company management guarantees the authenticity and completeness of this unaudited quarterly report, assuming legal responsibility - Company management guarantees the authenticity, accuracy, and completeness of the quarterly report content and assumes corresponding legal responsibilities[4](index=4&type=chunk) - This company's 2019 third-quarter report is unaudited[4](index=4&type=chunk) [Company Profile](index=3&type=section&id=Item%202.%20Company%20Profile) [Key Financial Data](index=3&type=section&id=2.1%20Key%20Financial%20Data) Q1-Q3 2019 saw revenue growth to **14.689 billion Yuan**, a slight net profit decline, and significant improvement in operating cash flow Key Financial Data for the First Three Quarters of 2019 | Indicator | Year-to-Date (Jan-Sep) | Prior Year-to-Date (Jan-Sep) | YoY Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue (Yuan)** | 14,689,065,446.60 | 13,042,436,312.67 | 12.63% | | **Net Profit Attributable to Shareholders (Yuan)** | 2,616,402,497.00 | 2,628,239,492.41 | -0.45% | | **Net Cash Flow from Operating Activities (Yuan)** | 201,220,260.39 | 136,331,666.69 | 47.60% | | **Basic Earnings Per Share (Yuan/share)** | 0.59 | 0.58 | 1.72% | | **Weighted Average Return on Net Assets (%)** | 19.85% | 22.04% | Decrease 2.19 percentage points | | **Total Assets (End of Reporting Period, Yuan)** | 27,393,158,774.71 | 29,591,446,002.78 (End of Prior Year) | -7.43% | - In the first three quarters of 2019, the company's total non-recurring gains and losses amounted to **199 million Yuan**, primarily from disposal gains/losses of non-current assets, government subsidies, and investment income from transactional financial assets[6](index=6&type=chunk) [Shareholder Information](index=4&type=section&id=2.2%20Shareholder%20Information) As of Q3 2019, the company had **48,518 shareholders**, led by Hailan Group and Rongji International acting in concert - As of the end of the reporting period, the company had a total of **48,518 shareholders**[7](index=7&type=chunk) Top Three Shareholders' Holdings | Shareholder Name | Number of Shares Held | Shareholding Ratio (%) | | :--- | :--- | :--- | | Hailan Group Co., Ltd. | 1,765,971,703 | 39.95 | | Rongji International (Hong Kong) Co., Ltd. | 1,107,604,228 | 25.06 | | Shenzhen Tencent Puhe Limited Partnership (Limited Partnership) | 238,549,618 | 5.40 | - The largest shareholder, Hailan Group Co., Ltd., and the second largest shareholder, Rongji International (Hong Kong) Co., Ltd., are parties acting in concert[8](index=8&type=chunk) [Significant Events](index=5&type=section&id=Item%203.%20Significant%20Events) [Analysis of Significant Changes in Key Financial Statement Items and Indicators](index=5&type=section&id=3.1%20Company%20Major%20Accounting%20Statement%20Items%2C%20Significant%20Changes%20in%20Financial%20Indicators%20and%20Reasons) The company's financial items saw significant changes, including asset increases from a merger, decreased cash, and higher investment income Major Balance Sheet Item Changes | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Monetary Funds | -30.57% | Primarily due to increased cash payments for dividend distribution and repayment of bank loans during the current period | | Other Receivables | 110.63% | Primarily due to increased operational receivables and security deposits paid after the disposal of subsidiary equity in the current period | | Goodwill | 709.17% | Primarily due to increased goodwill formed from the merger of Ying's Baby & Child in the current period | | Intangible Assets | 76.23% | Primarily due to intangible assets from the merger of Ying's Baby & Child in the current period | | Long-term Equity Investments | -93.23% | Primarily due to the inclusion of Ying's Baby & Child in the scope of consolidated financial statements in the current period | Major Income Statement and Cash Flow Statement Item Changes | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Administrative Expenses | 39.45% | Primarily due to increased employee compensation and depreciation/amortization in the current period | | Investment Income | 138.75% | Primarily due to increased investment income from the sale of transactional financial assets in the current period | | Net Cash Flow from Operating Activities | 47.60% | Primarily due to increased cash received from sales of goods and provision of services in the current period | | Net Cash Flow from Financing Activities | -527.16% | Primarily due to increased cash received from bond issuance in the prior period | [Progress of Significant Events](index=6&type=section&id=3.2%20Progress%20of%20Significant%20Events%20and%20Analysis%20of%20Their%20Impact%20and%20Solutions) The company reported progress on convertible bonds, including conversions and repurchases, and initiated a second share repurchase program - Convertible Corporate Bonds: As of September 30, 2019, a cumulative **565,000 Yuan** of 'Hailan Convertible Bonds' had been converted into company shares. The company also exercised a convertible bond put option, with a repurchase amount of approximately **49.64 million Yuan**[11](index=11&type=chunk) - Share Repurchase: The company initiated its second share repurchase plan, intending to repurchase and cancel shares using **691 million to 1.036 billion Yuan** of its own funds. As of the end of September 2019, **7,698,100 shares** had been repurchased, representing **0.1742%** of the total share capital[11](index=11&type=chunk) [Appendix](index=7&type=section&id=Item%204.%20Appendix) [Financial Statements](index=7&type=section&id=4.1%20Financial%20Statements) This section presents the company's unaudited consolidated and parent company financial statements for Q3 2019 [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2019, total assets were **27.393 billion Yuan** (down 7.43%), with **13.920 billion Yuan** in liabilities and significant inventory Key Items from Consolidated Balance Sheet (As of September 30, 2019) | Item | Amount (Yuan) | | :--- | :--- | | **Total Assets** | **27,393,158,774.71** | | Monetary Funds | 7,308,596,214.52 | | Inventories | 9,449,063,272.97 | | **Total Liabilities** | **13,920,482,695.61** | | Notes Payable | 1,827,302,292.00 | | Accounts Payable | 5,143,812,349.39 | | **Total Owners' Equity** | **13,472,676,079.10** | | Equity Attributable to Parent Company Owners | 13,192,697,893.61 | [Parent Company Balance Sheet](index=11&type=section&id=Parent%20Company%20Balance%20Sheet) As of September 30, 2019, parent company total assets were **22.216 billion Yuan**, primarily driven by **17.919 billion Yuan** in long-term equity investments Key Items from Parent Company Balance Sheet (As of September 30, 2019) | Item | Amount (Yuan) | | :--- | :--- | | **Total Assets** | **22,215,930,467.25** | | Long-term Equity Investments | 17,919,312,756.13 | | **Total Liabilities** | **3,702,559,583.60** | | Bonds Payable | 2,379,998,135.87 | | **Total Owners' Equity** | **18,513,370,883.65** | [Consolidated Income Statement](index=13&type=section&id=Consolidated%20Income%20Statement) Q1-Q3 2019 saw total operating revenue of **14.689 billion Yuan** (up 12.63%) and net profit of **2.616 billion Yuan** (down 0.45%), with basic EPS at **0.59 Yuan** Key Items from Consolidated Income Statement (January-September 2019) | Item | Amount (Yuan) | YoY Change | | :--- | :--- | :--- | | Total Operating Revenue | 14,689,065,446.60 | 12.63% | | Total Operating Costs | 11,192,479,675.37 | 19.0% | | Operating Profit | 3,446,397,846.58 | -1.70% | | Total Profit | 3,481,740,822.28 | -1.01% | | Net Profit Attributable to Parent Company Shareholders | 2,616,402,497.00 | -0.45% | | Basic Earnings Per Share (Yuan/share) | 0.59 | 1.72% | [Parent Company Income Statement](index=16&type=section&id=Parent%20Company%20Income%20Statement) Q1-Q3 2019 parent company net profit of **2.278 billion Yuan** significantly exceeded **1.362 billion Yuan** operating revenue, driven by **2.201 billion Yuan** in investment income Key Items from Parent Company Income Statement (January-September 2019) | Item | Amount (Yuan) | | :--- | :--- | | Operating Revenue | 1,361,661,096.23 | | Investment Income | 2,200,964,853.89 | | Operating Profit | 2,338,826,587.24 | | Net Profit | 2,277,655,050.96 | [Consolidated Cash Flow Statement](index=18&type=section&id=Consolidated%20Cash%20Flow%20Statement) Q1-Q3 2019 saw operating cash flow of **201 million Yuan** (up 47.60%), positive investing cash flow, and significant financing cash outflow due to debt and dividends Consolidated Cash Flow Statement Summary (January-September 2019) | Item | Amount (Yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | 201,220,260.39 | | Net Cash Flow from Investing Activities | 180,229,370.51 | | Net Cash Flow from Financing Activities | -2,968,801,043.34 | | Net Increase in Cash and Cash Equivalents | -2,580,708,003.94 | | Cash and Cash Equivalents at Period-End | 5,576,120,330.75 | [Parent Company Cash Flow Statement](index=20&type=section&id=Parent%20Company%20Cash%20Flow%20Statement) Q1-Q3 2019 parent company cash flow included negative operating cash flow, **1.716 billion Yuan** net inflow from investing, and **2.913 billion Yuan** net outflow from financing Parent Company Cash Flow Statement Summary (January-September 2019) | Item | Amount (Yuan) | | :--- | :--- | | Net Cash Flow from Operating Activities | -208,619,880.69 | | Net Cash Flow from Investing Activities | 1,715,860,347.93 | | Net Cash Flow from Financing Activities | -2,913,422,483.30 | | Net Increase in Cash and Cash Equivalents | -1,406,180,071.55 | | Cash and Cash Equivalents at Period-End | 768,653,913.08 | [Explanation of Adjustments for First-Time Adoption of New Financial Instruments Standards](index=22&type=section&id=4.2%20Explanation%20of%20Adjustments%20for%20First-Time%20Adoption%20of%20New%20Financial%20Instruments%20Standards%20and%20Related%20Items%20in%20Opening%20Financial%20Statements%20for%20the%20First%20Year%20of%20Implementation) Effective January 1, 2019, the company adopted new financial instruments standards, reclassifying financial assets and adjusting equity accounts in opening statements - The company first adopted new financial instruments standards effective **January 1, 2019**, and adjusted relevant items in its opening financial statements[29](index=29&type=chunk) - Key adjustments include reclassifying **549 million Yuan** of 'available-for-sale financial assets' and **16 million Yuan** of 'financial assets measured at fair value through profit or loss' under the old standards to **298 million Yuan** of 'transactional financial assets' and **267 million Yuan** of 'other equity instrument investments' under the new standards[29](index=29&type=chunk) - Due to the standard transition, the company's opening other comprehensive income decreased by **63.47 million Yuan**, surplus reserves increased by **6.68 million Yuan**, and retained earnings increased by **56.79 million Yuan**[31](index=31&type=chunk)

Financial Performance - Net profit attributable to shareholders rose by 4.66% to CNY 2.63 billion for the year-to-date period[6] - Operating revenue for the year-to-date period reached CNY 13.04 billion, reflecting a 4.53% increase year-on-year[6] - Basic earnings per share increased by 3.57% to CNY 0.58 per share[6] - The company's total comprehensive income for Q3 2018 was ¥541,123,425.13, compared to ¥644,377,498.56 in Q3 2017, a decrease of about 18.0%[27] - The company's net profit attributable to shareholders for Q3 2018 was ¥562,228,764.40, compared to ¥636,419,685.48 in Q3 2017, reflecting a decrease of approximately 11.6%[27] - The total profit for the first nine months of 2018 was ¥1,829,799,711.62, down from ¥2,660,415,933.45 in the same period last year, reflecting a decline of approximately 31.2%[30] Assets and Liabilities - Total assets increased by 14.34% to CNY 28.70 billion compared to the end of the previous year[6] - Total liabilities reached CNY 16.21 billion, up from CNY 13.92 billion, which is an increase of about 16.5%[20] - The company's total equity increased to CNY 12.49 billion from CNY 11.18 billion, representing a growth of approximately 11.7%[20] - The total assets of the company reached ¥21,597,675,002.20, an increase from ¥19,103,893,259.77 year-over-year[23] Cash Flow - Cash flow from operating activities turned positive at CNY 136.33 million, a significant recovery from a negative cash flow in the previous year[6] - The net cash flow from operating activities was CNY 136,331,666.69, a significant improvement from a negative CNY 71,316,190.62 in the previous period[11] - The cash inflow from sales of goods and services reached ¥14,949,174,147.11, an increase of 4.4% compared to ¥14,320,471,753.70 in the same period last year[34] - The total cash inflow from investment activities amounted to ¥707,052,657.32, compared to ¥82,346,624.00 in the same period last year, indicating a substantial increase[35] - The net cash flow from financing activities was ¥695,014,516.27, a recovery from a negative cash flow of -¥2,119,215,808.25 in the same period last year[39] Shareholder Information - The total number of shareholders reached 41,800 by the end of the reporting period[8] - The largest shareholder, Hailan Group Co., Ltd., holds 39.31% of the shares, with 950 million shares pledged[8] Expenses - Sales expenses increased by 37.41% to CNY 1,186,833,228.36, mainly due to higher advertising and direct store expenses[11] - R&D expenses increased by 59.60% to CNY 36,452,946.51, reflecting increased investment in research and development[11] - The cash outflow for employee compensation was ¥1,104,779,983.66, up from ¥989,562,664.37 in the previous year, indicating increased labor costs[34] Investments - The company issued convertible bonds totaling CNY 3 billion to fund projects including supply chain information upgrades and logistics park construction[12] - The company completed an investment agreement to acquire a 52% stake in a brand management company for CNY 26 million[16] - Investment income surged by 1112.60% to CNY 83,594,320.92, primarily from the disposal of available-for-sale financial assets[11] Receivables and Prepayments - Accounts receivable increased by 56.30% to CNY 955,731,707.48, primarily due to an increase in receivables from store operations[10] - Prepayments rose by 90.44% to CNY 988,467,287.33, mainly due to increased advance payments to suppliers[10] - Other receivables increased by 98.17% to CNY 137,342,314.92, primarily due to an increase in deposits paid[10]

Financial Performance - The company's operating revenue for the first half of 2018 was approximately RMB 10.01 billion, representing an increase of 8.23% compared to the same period last year[19]. - The net profit attributable to shareholders for the first half of 2018 was approximately RMB 2.07 billion, reflecting a growth of 10.20% year-on-year[19]. - The basic earnings per share increased to RMB 0.46, up by 9.52% from RMB 0.42 in the same period last year[18]. - The net cash flow from operating activities reached approximately RMB 840.46 million, a significant increase of 58.51% compared to the previous year[19]. - The company's total assets decreased by 1.74% to approximately RMB 24.66 billion compared to the end of the previous year[19]. - The weighted average return on equity was 16.93%, down by 1.37 percentage points from the previous year[18]. - The company did not distribute profits or increase capital reserves during this reporting period[5]. Business Operations - The company operates a brand chain business model, combining self-operated and franchised stores to achieve rapid expansion without charging franchise fees[22]. - The online sales strategy includes a unified pricing model with offline sales, utilizing various e-commerce platforms and the company's own mobile app[22]. - The company opened 475 new stores and closed 170, resulting in a net increase of 305 stores, bringing the total to 6,097 stores by June 2018[33]. - The company’s supply chain efficiency was enhanced through improved communication and management with suppliers, aiming to meet diverse consumer demands[35]. - The company’s strategy includes expanding its international presence, with new stores opened in Malaysia and Singapore, and plans for Thailand and Vietnam[33]. - The company focuses on a multi-brand management platform to adapt to changing consumer preferences and enhance market share[32]. - The company emphasizes product quality and brand image through innovative marketing strategies and content creation[34]. Market and Industry Insights - The apparel retail sector saw a 9.2% growth in the first half of 2018, with online retail sales increasing by 30.1%[26]. - The company has outlined potential risks in its operations and industry, advising investors to be cautious[7]. - The company anticipates potential market risks due to intensified competition and changing consumer preferences, and will optimize operations accordingly[60]. Investments and Acquisitions - The company has initiated a convertible bond project to raise up to CNY 3 billion for upgrading its supply chain and logistics[45]. - The company acquired a 17.10% stake in Zhihe International Trade and a 2.7027% stake in English Baby Products, increasing its total stake in English Baby to 45.5173%[46]. - The company made significant equity investments in various subsidiaries, with a total investment amounting to 1,000,000 yuan in Shanghai Aijitu Clothing Sales Co., Ltd.[54]. Financial Position and Assets - Total assets at the end of the reporting period amounted to 32,000,000,000.00 yuan, with a year-on-year increase of 41.93% in financial assets measured at fair value[52]. - Accounts receivable increased by 57.46% to 26,124,670.00 yuan, primarily due to the recovery of payments[52]. - Other receivables rose by 52.25% to 105,518,521.65 yuan, mainly from increased rental deposits and bidding guarantees[52]. - Other current assets increased by 63.57% to 88,042,087.40 yuan, primarily due to an increase in VAT credits[52]. - Other non-current assets surged by 514.72% to 178,095,383.32 yuan, mainly due to increased prepaid investment[52]. - Accounts payable increased by 31.85% to 2,319,014,640.00 yuan, primarily due to the use of notes for settlement[52]. Shareholder Information - As of the end of the reporting period, the total number of ordinary shareholders was 42,510[78]. - The largest shareholder, Hailan Group Co., Ltd., holds 1,765,971,703 shares, accounting for 39.31% of the total shares[78]. - The second largest shareholder, Rongji International (Hong Kong) Co., Ltd., has reduced its holdings by 238,549,618 shares, holding 1,107,604,228 shares, which is 24.65% of the total[78]. - Tencent's investment entity increased its holdings by 238,549,618 shares, now holding 238,549,618 shares, representing 5.31%[78]. Corporate Governance and Compliance - The company confirmed that its actual controller and related parties have not engaged in any competitive business activities with the listed company[65]. - The company appointed Tianheng Accounting Firm as its financial and internal control auditor for the fiscal year 2018[66]. - There were no significant lawsuits or arbitration matters during the reporting period[66]. - The company and its controlling shareholders maintained a good integrity status, with no unfulfilled court judgments or significant debts due[67]. Research and Development - The company increased its R&D expenditure by 72.41% to approximately CNY 31.75 million, driven by the introduction of new brands[48][50]. - The company has filed for 10 patents in the first half of the year, including 6 invention patents, to strengthen its technological capabilities[44]. Environmental and Social Responsibility - The company is not classified as a key pollutant discharge unit and does not have any environmental information to disclose[73]. - The company has not disclosed any employee stock ownership plans or other incentive measures[71].