Performance summary: FY2021H1's revenue was 230 million yuan, down 39.9% from the same period last year, the net profit was 915.2 billion yuan, down 28.1% from the same period last year, and the adjusted net profit was 98.8 million yuan, down 30.8% from the same period last year. The main adjustment item was the amortization of intangible assets resulting from the acquisition, and the company announced that the board of directors had decided to pay an interim dividend of HK $0.06 per share, reflecting the company's annual results and medium-and long-term growth confidence.

The performance of higher education business is steady, and the income of film, television and training is confirmed to be fluctuating. 2021H1's performance is mainly contributed by the higher education business, and the revenue of the higher education business in the first half of the year increased by 13.4% over the same period last year, mainly due to the increase in enrollment. In the 2020-21 academic year, the number of new enrollment increased significantly by 30% to 6592, and the number of enrollment increased to 17700 (yoy+19.2%, undergraduate 15266 + international 441 + continuing education 1957). The company expects the number of students in the 2021-22 academic year to increase by 30% + (to more than 23000). Film and television business revenue of 4.16 million (yoy-97.9%), the company expects to complete the delivery confirmation in the second half of the year in the production or review of works, the corresponding inventory items have increased significantly to 240 million yuan compared with the same period last year, and the income from media arts and vocational training has reached 15.168 million yuan, mainly due to the fact that Shuimu comes from April and June is the revenue recognition off-season.

Profitability is stable and improving, and multi-business coordination is expected to be reflected throughout the year. The gross profit margin of 2021H1 higher education business has steadily increased to 63.8% compared with the same period last year, mainly due to the continuous reflection of economies of scale and the increase in the proportion of continuing education colleges. The gross profit margin of training business / film and television business is 5.7% and 93.5%, which is mainly affected by the caliber of income recognition. According to the operation situation in previous years, we expect the annual gross profit margin to be about 50% and 40%. The company's overall gross profit margin increased to 60.6% (yoy+14.3PCTs) when higher education business accounted for a relatively high proportion. On the expense side, due to the reduction in the proportion of film and television business in the first half of the year, the rate of sales expenses dropped to 4.5% (yoy-1.3PCTs), and the rate of management expenses increased to 26% (yoy+16PCTs) affected by the acquisition of Shuimuyuan. Overall, the net interest rate and adjusted net interest rate are 39.6% and 42.8% respectively (yoy+6.5/5.7PCTs). It is expected that multi-business coordination improvement will appear throughout the year.

Higher education business space certainty is still strong, the acquisition of the Olympic Institute to achieve indirect brand development. The upper limit of southward land capacity is about 35000. Compared with the current students, there is still plenty of room. With reference to the tuition fees of three private colleges and universities in Jiangsu Province, it is estimated that the tuition fees for the 2022-23 academic year will be closer to 26000 yuan. In addition, the Institute of continuing Education and the International College of High profitability are not restricted by the number of places and tuition fees. In June 2021, the company acquired the Olympic Sports Institute with a consideration of 450 million. It is expected that in September, it will be used as a Nanchuan sub-campus. In addition to the existing 3000 students, it is expected that at least 8000 additional places will be obtained on this campus in the future. Therefore, the overall capacity of Nanchuan is expected to move forward to more than 40,000 people.

Shuimuyuan realized the merger in April, and vocational training opened another engine of training business. Art examination training leader Shuimuyuan completed the table in April, as of 2021H1 advance collection of 110 million yuan, the number of outlets has increased from 5 in the current period to 7 at present and will continue to expand in the future; the first venue for children's art training has been opened and preliminary enrollment; vocational training is based on the company's existing business advantages of new film and television production and art teachers related training courses, is expected to open another high-growth business unit.

Investment suggestion: at present, the company has basically completed the layout of media art education business at all levels in the whole stage, and steadily consolidated its leading position in the industry. according to the report, we have adjusted the company's 2021-2023 net profit forecast to 4.11pm 5.98pm 7.26 (formerly 4.46pm 6.15pm 745 million), with an increase of 29.9% 45.5pm 21.3%, corresponding to EPS 0.25pm 0.36pm 0.44 yuan. The current price corresponds to PE 10X/7X/6X, maintaining the "buy" rating.

Risk hints: the film and television business supervision policy is tightened; the Civil Promotion Act will land or store policy risks in the future; competition in the film and television production industry will intensify; profitability in the process of business development is lower than expected.