In the first half of 2021, the company realized income / return net profit / deducted non-net profit 4.73 million yuan, down 8.35%, 127%, 92%, and non-recurrent loss of-8.51 million yuan, mainly non-current asset disposal loss; net operating cash flow-48 million yuan, compared with-325 million yuan in the same period last year.

2021Q2 realized income / return net profit / deducted non-net profit 2.34 million yuan, down 39%, 463% and 560% compared with the same period last year.

The company's 2021 half-year gross profit margin decreased by 35.5% compared with the same period last year, mainly because the gross profit margin of educational products / content security products decreased by 3.5/8.6pct to 35.1%, respectively; the sales / management / R & D / financial expense rate was 14.1%, 37.3%, 6.8%, 6.4% and-4/9.7/-3.6/-2.2pct, respectively.

The company's monetary capital for the first half of 2021 was 133 million yuan, down 64 percent from the end of last year, mainly due to the repayment of loans. At the same time, affected by the epidemic and the "double reduction" policy, the collection of large language business decreased; the contract debt was 610 million yuan, an increase of 20 percent over the end of last year; short-term loans / long-term loans were 439 million yuan, down-23 percent from the end of last year, but the overall financial pressure was still great.

Analysis and judgment:

In terms of products, the company's income from educational products / content security reached 368 million yuan, down 9% from the same period last year. From the point of view of the molecular company, 1. The income of the future Chinese learning service is 229 million yuan, an increase of 26.2% over the same period last year. (that is, the learning service) realized a gross profit margin of 42.15%, a year-on-year decline of 13.23pct, and a net loss of 33.58 million yuan, compared with 24.19 million yuan in the same period last year. It is mainly affected by offline suspension and double reduction policy, so the original large language subject service business gradually turns to non-subject learning services. The sub-brand "Doushen Aesthetic Education" develops rapidly with the help of the resources and channels of the original discipline business, including but not limited to the covered cities, the existing direct operation outlets, the original agent promotion and the original student base. 2. Other subsidiaries have achieved losses to varying degrees. The net investment loss of Lishichen New Technology / Sichen Yunan Information Technology / Kangbang Technology / Centennial Talent / Fujiyun Education (formerly 360 Education) is respectively-2179gambit 1415Company963,992 million yuan.

Investment advice:

Considering the impact of the double reduction policy, the 21-23 income was lowered from RMB 100 million in 19-23-30 to RMB 100 million in 9-12-15, and the net profit of return to the mother was reduced from RMB 2.41pm to RMB 1.2b, and the rating was downgraded from "buy" to "overweight". Focus on the transformation of big language to aesthetic education business in the future.

Risk hint

Policy uncertainty, transformation uncertainty, financial pressure, systemic risk.