Main points of investment
Event: in the first three quarters of 2017, the company achieved operating income of 507 million yuan, an increase of 23.66%, a net profit of 38.219 million yuan, an increase of 37.05%, and a net profit of 32.1466 million yuan, an increase of 41.73%, or 0.12 yuan per share. 2017Q3 achieved operating income of 191 million yuan, an increase of 20.40%, a net profit of 14.5495 million yuan, an increase of 81.21%, and a net profit of 13.885 million yuan, an increase of 94.7%.
Comment
It is estimated that the net profit contributed by the education business is about 6 million yuan. The company has acquired Yali Technology (65%), Jiayu Culture (51%) and voluntary Qiyu (100%) to improve the layout of international education and early childhood education industry. The net profit contributed by Yali science and technology is less than 1 million yuan; the net profit contributed by Jiali culture is about 3.5 million yuan; and the net profit contributed by voluntary Qiyu since May is more than 2 million yuan. Judging from the current performance, it is estimated that there is little problem with Jiawei culture and obligations to fulfill performance commitments.
The endogenetic development of education is carried out step by step. In the field of international education, Yali Science and Technology expects to add 2-3 new teaching points this year; in the field of preschool education, it will expand in Jiangsu, Zhejiang and Shanghai with Jiayu culture and voluntary education as the main body, and Jiayu culture will open two new early education centers.
The net profit contributed by the original business is about 32 million yuan. Downstream coal prices rebounded, bringing the company's mine explosion-proof products business trend to improve; power equipment business due to changes in the annual procurement fluctuations of downstream power grid enterprises declined. It is estimated that in the first three quarters, the company's original mine explosion-proof and power equipment business contributed a net profit of about 32 million yuan, an increase of about 15%.
Net profit is expected to increase by 20-60% in 2017. The company expects net profit to increase by 20-60% to 4624.35-61.6579 million yuan in 2017.
Investment suggestion: the company's education business revolves around two sub-areas of international education and early childhood education, with steady endogenous growth and extension expectations. The original business tends to improve under the background of periodic improvement in the downstream coal industry. It is estimated that the annual earnings per share in 2017-18-19 is 0.19 pound 0.23 pound 0.25 yuan, and the company's current market capitalization is 4.5 billion yuan, corresponding to the valuation 74x/60x/56x.
Risk tips: campus expansion, student registration, tuition fee increase is not up to expectations, resulting in education business growth is not up to expectations.
