Matters: The company announced on the evening of December 16 that Hong Kong Qinshang, a wholly-owned subsidiary of the company, signed the “Memorandum of Key Terms”, “Memorandum Amendment Agreement”, and “Tripartite Agreement”. Our comments on this are as follows: Eddy Education has a valuation of 2.9 billion dollars, which is the content of a well-known domestic international education service provider transaction: Hong Kong Qinshang plans to use cash to acquire 100% of the shares of NIT Education Group (NIT Education Group) held by Aidi Education (Aidi Education Group). Eddy Education Group passed The VIE structure controls a number of educational assets and school operations located in China. The initial valuation of the transaction is the equivalent of RMB 2.9 billion in US dollars. It is not ruled out that it will be carried out by cooperating with relevant parties to establish funds, etc. Eddy Education entered China in 1997. Its main educational entity is the Beijing Eddy International Education Park. It is located at No. 7 Louzizhuang Road, Chaoyang District. It covers an area of 556 acres and has more than 2,600 students. The park has four different types of international schools: Beijing Australian International School, Beijing Eddy International School, Beijing Eddy Foreign Language School, and Beijing Eddy Kindergarten, which provide Chinese and foreign students with full English and bilingual courses from kindergarten to high school. The school is managed in a closed boarding system. The number of classes is limited to 25 to 30 students, and each grade is limited to 10 classes. Eddie Education has a rich curriculum system. Kindergarten courses include English courses, special cultural courses such as Chinese studies, virtues, and Eastern and Western etiquette, and art courses such as Orff music and art. The elementary school curriculum mainly includes basic courses+English+information technology+art. Junior high schools offer the three compulsory courses of IGCSE: mathematics, English, and science. Students can obtain a certificate of completion of the junior high school level issued by the Cambridge University International Examination Board. The high school level has categories such as Australian International High School (WACE), American International High School (ASE), British International High School (A-LEVEL), and international college preparatory courses, and English training courses. At the same time, Eddy is also the official test site for the five major examinations including IELTS, WACE\ TEE, A-LEVEL, TOFEL, and ACT. Up to now, Eddy has successfully sent more than 11,000 students to study overseas, and has developed into a leading international education institution in Australia, the United Kingdom, and the Commonwealth countries or regions. Eddy's International School charges 17-240,000 per year. Eddie International School charges for kindergartens are 170,000/year, elementary and junior high schools are 172,000 per year, Australian high schools are 189,500 per year, British high schools charge 189,500 per year, British high schools charge 189,500 per year for high school and 229,500 per year for senior year, US high schools charge 189,500 per year for the first year of high school, and 239,500 per year for sophomore and senior year. If high school students need to attend the language department, the tuition fee is 50,000 per year. According to this, according to estimates of the average tuition fee for students at Eddy International School is around 200,000 per year and 2,600 students, the school's revenue is estimated to be around 500 million yuan, and the estimated profit scale is around 200 million yuan based on a net interest rate of about 40%. Qinshang Education is already quite large. The company has now formed K12 training represented by Longwen Education (estimated net profit of about 150 million yuan in 2017), early childhood education represented by Little Red Hat (promised net profit for 2016-2019 is 5000/5750/6613/76.04 million yuan respectively), Eddie Education (estimated net profit in 2016 is about 150 million yuan to 200 million yuan), and British Education (2016-2019 promised net profit of 1,000/1,300/1690/21.97 million yuan, respectively) The “K12+3” and “in-school+off-campus” education map, which consists of the three core businesses of international education, covers the full scope of education. Assuming that all of the acquisitions are successfully completed, and all are carried out mainly by listed companies, the company's net profit for exam preparation in the education sector reached 380 million yuan to 450 million yuan in 2017, making it a private education group second only to New Oriental Peace Future in terms of domestic profit scale. Considering that the company's cash on the books is not enough to directly complete the acquisition of Eddie Education, it is expected that the acquisition will need to be completed by setting up funds or subscribing for fund shares, etc., so the specific profit contribution has yet to be determined by setting up the transaction structure. risk factors. The risk of mergers and acquisitions falling short of expectations. Earnings forecasts and valuation ratings. Since it is not clear exactly how the transaction structure of this transaction will be arranged, Eddie's contribution to education will not be considered yet, and the performance forecast will be maintained: Based on the Longwen Q4 merger assumption, the company's overall dilution of EPS in 2016-2018 is expected to be 0.05/0.14/0.17 yuan. The current stock price (9.41 yuan) corresponds to the 2017 PE valuation of 66X. Considering that Eddie Education's transaction method is still unclear, for example, considering only the profits brought by projects such as Little Red Riding Hood and British Education, the company's 2017 education sector exam preparation profit was about 250 million yuan. For example, considering the profits brought by projects such as Little Red Riding Hood, British Education, and Eddie Education, etc., the company's 2017 education sector exam preparation profit is expected to reach about 400 million yuan, corresponding to a market value of 16 billion yuan according to the 40X PE valuation. The net profit volume of the company's original LED business is expected to remain around 50 million yuan, corresponding to a market value of 1.5 billion yuan according to the 30X PE valuation, with a total market value of 175 billion yuan. The company currently has a market value of 14 billion yuan, and there is still room for growth, maintaining a “buy” rating. It is recommended to actively follow the progress of the Eddie Education Program transaction and choose the opportunity to allocate opportunities to enjoy the growth dividends of attending the “Big Education Platform”.