Summary of the report:
According to the company's quarterly report for 2016, in the first three quarters of this year, the company achieved operating income of 629 million yuan, an increase of 189.61 percent over the same period last year, an operating profit of 67.3 million yuan, an increase of 56.3 percent over the same period last year, and a net profit of 42.1577 million yuan belonging to the parent company, an increase of 27.79 percent over the same period last year.
With the rapid growth of performance, EdSaaS has entered a period of scale promotion. In the third quarter, the company achieved operating income of 223 million yuan, an increase of 189% over the same period last year, and a net profit of 6.25 million yuan, an increase of 1050% over the same period last year, in line with the previous consistent profit forecast. In the first three quarters of 2016, the company's operating costs, sales expenses and management expenses all increased significantly, of which operating costs were 415 million yuan, an increase of 255% over the same period last year; sales expenses were 46.77 million yuan, an increase of 226% over the same period last year; and management expenses were 94.19 million yuan, an increase of 137% over the same period last year. As the company's core business EdSaaS from the strategic layout to the scale promotion period, the increase in operating costs and expenses is normal.
We will actively promote the informationization of education, the mobile campus portal has developed significantly, and the whole course Cloud 2.0 has been launched. By the end of the third quarter, the company's EdSaaS business covered 2 municipalities directly under the Central Government of Chongqing and Tianjin, 11 provinces and 35 prefecture-level cities, with a total operating income of 233 million yuan, an increase of 231% over the same period last year. As the mobile entrance to the whole course cloud, the mobile campus portal has more than 12000 registered schools, with nearly 2 million monthly active users and an average daily PV of more than 1 million. The latest full-class cloud 2.0 was launched on August 28. "full-class cloud 2.0" integrates seven standardized modules, such as campus communication, intelligent educational administration, intelligent teaching, resource center, campus office, etc., and is expected to create a traffic entrance advantage.
Profit forecast and investment advice: based on: (1) continuing education is seasonal, profit growth in the fourth quarter is worth looking forward to. (2) the company has turned from a single home-school information service provider to a leading enterprise in the field of comprehensive education services in K12. With the EdSaaS business from the strategic layout to the scale promotion period, the company has officially entered the collaborative development period of imported resources and product matrix, and the construction of Quantong education ecosystem is expected to be further accelerated. We believe that the company is facing a good market pattern and policy environment, with the promotion of the whole course network, the whole class cloud products, the company's revenue is expected to maintain rapid growth. It is estimated that the company's 2016, 2017 and 2018 net profit will be 200 million yuan, 340 million yuan and 477 million yuan respectively, and earnings per share will be 32 million yuan, 54 million yuan and 75 million yuan respectively.
Risk hint: business expansion is not as expected and market competition is intensified.