Company profile: EO Technology is a leading manufacturer of mine explosion-proof appliances with a complete range of products in the country. Mainly engaged in mine explosion-proof electrical equipment, mine explosion-proof monitoring and monitoring products and mine emergency rescue products research and development, design, production and sales, the original main customers are coal production enterprises. In order to cope with the changes in the market environment, the company promotes the proportion of high-quality customers' products, actively promotes the application of explosion-proof products in many fields, and expands the business of electrical equipment. The company sets up an industrial fund to jointly invest in the target of education with listed companies to lay out the whole industrial chain of international education.
Competitive advantage: small and broad, the layout of the whole industry chain of international education. (1) the card position is an important node of the international education industry chain, which has a layout in high-end international preschool education, international curriculum training, overseas study service and post-study service, extending the whole industry chain of international education. (2) the orientation of high-end is in line with the upgrading of consumption & the trend of elite education. (3) the international course training of light asset mode operation has the ability of rapid expansion. (4) Reserve the high-quality contents of international courses and preschool education. (5) the management has strong determination and strong ability to implement the transformation.
Financial analysis: the traditional main business has slightly improved, and the education business has great potential. (1) the traditional main business income improved slightly in 2016 (YoY+18.8% in the first three quarters), power equipment gradually became the main source of income (H1 income contributed 42.7%), the gross profit margin improved (the gross profit margin of the first three quarters was 36.7% YoYue 3.3pct), and the net profit after deduction increased significantly (YoY21.5%). (2) in terms of education business, according to the performance commitments of the three acquired / proposed targets (estimated by CAGR) and the equity ratio, the net profit of targeting educational targets from 2017 to 2019 is 20.88 million yuan, 24.99 million yuan and 30.19 million yuan, CAGR20.2%.
Investment suggestion: the company's traditional main business has been slightly improved, and the layout of the whole industry chain of international education is beginning to take shape. The driving force of management transformation is strong, and it is expected that the rapid endogenous growth and the extension of education will continue to improve the contribution of education business performance and the overall profitability of the company, and digest the current high valuation level. It is expected that the annual EPS0.14/0.21/0.25 in 2016-17-18 will be rated as an increase in holdings, with a target price of 18.90 yuan.
Risk hint: affected by changes in educational laws and regulations, endogenous growth (number of schools, number of students, ARPU value) and extension expansion do not meet expectations.
