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Zhonggong Education (002607) 2019 Interim Report Review: Strong Performance Growth Channel Advantages Boost Multi-Category Expansion

16/03/2020

Zhonggong Education (002607) 2019 Interim Report Review: Strong Performance Growth Channel Advantages Boost Multi-Category Expansion

Investment Highlights The company released its 2019 Interim Report: 19H1 achieved revenue of 36.

400 million (+48.

8%), net of non-attributed net profit4.

700 million (+138.

8% (year-on-year), the performance approached the black notice limit.

As of 19H1, the company’s advance receipts totaled 56.

600 million, an increase of 194 over the end of 18.

6%, strong advance receipts are the basis for increasing long-term income.

  In terms of business, 18 9H1 public examination income 18.

200 million (+26.

3% YoY) ;; Institution 2.

100 million (+7.

0% YoY); Teacher 4.

300 million (+52.

2% YoY); comprehensive face-to-face 700 million

4% YoY); online 4.

4 billion (+205.

9%).

The reason for the rapid increase in income comes from two aspects: first, the number of trainees in the civil service sequence has decreased due to the gradual change in the record, and it has still increased by about 10 percentages (19H1 stepwise training +44.

It increased by 4% year-on-year, of which +30 was awarded in person.

8%, year-on-year), and the number of on-the-job applicants has increased rapidly (+62.

6% (YoY)) promotes the rapid growth of online training revenue; usually, the release of the leading effect drives the unit price of passengers to increase further, especially driven by the long-term learning trend, the unit price of civil servants has increased by more than 15%, and the comprehensive unit price has exceeded 15%.

The unit price of online training has been significantly improved, reaching 88%.

  As of 19H1, the company has established 880 direct sales outlets in 319 prefecture-level cities, and the company’s dense channel network is highly adaptable to the trend of declining positions.

In addition, the demand of the sinking market is more dispersed, and the performance of competitors’ participation is higher, which is more conducive to the company’s leading teaching and research scale and vertical integration and rapid response capabilities.

  While maintaining 上海夜网论坛 a steady and rapid growth in the recruitment field, the company has made aggressive investments in new tracks such as the postgraduate entrance examination and IT vocational training, and has achieved rapid growth in scale.

Under the strong momentum of the multi-category growth flywheel effect, the company’s new growth expectations are no longer repeated recruitment, but extended to the vocational education and training of the entire knowledge-based population.

We adjusted the company’s profit forecast to 19-21 net profit attributable to mothers, respectively.

900 million, 23.

5 billion, 30.

45 billion, EPS is 0.

27, 0.

38, 0.

49 yuan, corresponding to 8.

20 closing prices of PE were 55, 39, and 30 times respectively, maintaining the level of “prudent increase”.

  Risk Warning: Insufficient demand for IT vocational training, online growth is not up to expectations, recruitment training sinks to the speed ladder, etc.