Building a multi-dimensional life-long education system based on the background of the national team
Accurate digital marketing based on comprehensive, high-quality and real user data
Initial buy rating, based on DCF's target price HK$0.74, equivalent to 27x FY16E PE
The background of the national team helps to build a multi-dimensional lifelong education system.
Chuanglian Education is the largest online education and training service for civil servants and professional and technical personnel in China. According to the law, Chinese civil servants and professional and technical personnel must complete 12 days and 72 hours of training each year, respectively. Driven by the Internet and the wave of anti-corruption, online training has gradually replaced offline training with the advantages of good user experience, low cost and easy monitoring. Chuanglian Education is the only company with a holding position in a joint venture with civil servants and professional and technical personnel regulators. With the government background, Chuanglian Education also operates four other national Internet online training platforms, which are responsible for online training services in related vertical areas. We believe that the status of the national team will help the company continue to obtain high-quality government resources in the field of education in the future and help the company build a sound online education business system, including K12 education.
A digital marketing business model with education as the entrance and data as the core
Based on the rigid demand attribute of education and the accumulation of government resources, Chuanglian Education can obtain multi-dimensional real user data and make it the most valuable asset of the company. We believe that the company will continue to use online education as the entrance to obtain more high-quality data through cooperation with various governments and agencies. On the basis of high-quality user data resources, the future business model of Chuanglian Education will be based on big data's precision marketing. We believe that Chuanglian Education will provide professional training, interest training and life-related value-added services, including finance and health care, to its users through cooperation and self-management.
FY15-17 Revenue CAGR90% and profit CAGR93%
The revenue growth of Chuanglian Education comes from the online training of paying users and the increase in the length of training. The company had 3.3 million paying users at the end of 2014, and we expect it to reach 5 million / 10 million / 14 million in 2015-17. Excluding the potential revenue from value-added services, we expect that the training content of professional courses alone will increase the company's revenue by 52% in 2016, while more value-added services will still give the company considerable room for profit increase. At present, the 2016E Pbelt E of the A-share education sector and the overseas general education stock are 58.2x and 13.8x respectively. We believe that Chuanglian's unique market positioning and data-centric business model in the area of civil service / professional training can enjoy a certain valuation premium. For the first time, we cover the buy rating given to the company, with a target price of HK$0.74, corresponding to 27x 2016e PE.