[event] Zhonggong Education released 22Q3 results: revenue in the first three quarters was 3.89 billion (yoy-38.2%), and net profit was-820 million, reducing losses compared with the same period last year. The income in the third quarter was 1.667 billion yuan (yoy+15.4%), and the net profit belonging to the shareholders of the listed company was 68 million yuan, making a profit in a single quarter.
Part of the backlog of income from the examination delay was centrally recognized in the third quarter, resulting in an increase in revenue compared with the same period last year. 22Q1-Q3 achieved revenue of 3.89 billion (yoy-38.2%), the postponement of macro-epidemic exams and the adjustment of all-out products still led to a decline in revenue. In a single quarter, due to the postponement of the provincial examination pen interview to the third quarter, the revenue in the single quarter is 1.667 billion (yoy+15.4%), the follow-up Q4 still has part of the interview income and public institutions joint examination income, Q4 revenue is expected to continue the revenue growth trend. From the point of view of the flow, Q3 achieved a collection of 1.67 billion, and the off-season collection decreased from the previous month, but due to the same delay in refund, the contract liability of 4.74 billion was relatively stable and decreased slightly.
The cost-end effect is significant, and the profit margin is significantly improved. The gross profit margin of 22Q3 is 51.3%, which is significantly higher than the same period last year. On the one hand, it comes from the decline in staff salaries, on the other hand, it reduces the number of face-to-face classes. 22Q3 sales expenses yoy-25%, management expenses yoy-50%, R & D expenses yoy-47%, mainly comes from personnel optimization and appropriate contraction of non-core business. 22Q3 realized an operating profit of 61.868 million yuan and became a regular employee in a single quarter.
Under the macro employment pressure, the demand for vocational training is exuberant. The basic demand for enrollment business is stable. In 21-22-23, the number of students enrolled in the national examination in 21-22-23 was 31,000. the enrollment of yoy+7%/21%/18.8%, has been expanded for three consecutive years. As of 16:00 on the 28th, 612600 had applied for the examination, an increase of nearly 200000 over the same period last year, and the number of people who passed the examination was 402900, more than 140000 over the same period last year, and the demand from the industry was still strong. In-depth education system teaching is expected to contribute to long-term increment. In 2021, the vocational education department was set up in public education, and has begun to operate vocational education-related business independently, entering the vocational education market with a new team structure. So far, public education has cooperated with a number of undergraduate, junior college and technical secondary schools in Hunan, Hubei, Jiangsu, Henan, Shanxi and other places.
Vocational education track is absolutely leading, with deep barriers to brand and management ability. Affected by the epidemic situation and product adjustment, we have reduced the net profit of homing in 2022-2024 to-9.92 Maxim 444Compact 112 million yuan (the original forecast was 22-23E 10.08 / 1.82 billion yuan). The vocational education track has plenty of long-term space, strong multi-track synergy, and the cash flow of prepaid is mainly stable. We use the discounted free cash flow method to value the market value of 33.21 billion yuan, corresponding to the target price of 5.38 yuan. Downgrade to "overweight" rating.
Risk hint
The epidemic repeatedly affected the development of business, intensified competition in the industry, product adjustment was less than expected, and refund pressure exceeded expectations.
