Event
On June 26, 2018, Sun Shiyao, Huo Wenju, Yu Zhifen, Sun Hongli and Ruichang, a wholly-owned subsidiary of Zhongrui Holdings, signed a share transfer Agreement, agreeing to transfer 11% of the shares to Ruichang at a transfer price of 6.6 yuan per share and 637 million yuan per share. After the transfer, Ruichang will hold 11.00% of the shares and will become the largest shareholder of Lipeng. At the same time, Sun Shiyao delegated 7.6% of Li Peng's voting rights to Ruichang, which will account for 18.60% of the voting rights. The actual controller of Li Peng will be changed to Mr. Qian Jianrong.
Investment logic
Lipeng shares are expected to transform to the education industry with the help of the actual controller in the future. Mr. Qian Jianrong, the future controller of Lipeng shares, once worked in the Education Bureau of Zhangjiagang City, Jiangsu Province, and later founded Zhongrui Group, which has served as the executive director, chairman and chairman of Zhongrui Holdings. Zhongrui Holdings' main business includes investment in education industry, investment in hotel industry and related industries, real estate development, operation and consulting, etc.
Zhongrui Holdings and its subsidiaries are mainly engaged in the education industry, but according to the classification of schools and training, its main business belongs to the school industry and belongs to the subdivision field of international schools, especially international schools compared with the training industry. relative barriers are higher and profitability is more stable. At present, Zhongrui Education consists of basic education (bilingual schools, international schools) and preschool and vocational education, with operations in more than 20 provinces and cities across the country, as well as overseas markets such as the United States and Singapore. It has successively held a number of bilingual schools and international schools in the Yangtze River Delta, as well as Wuxi Nanyang Vocational and Technical College, Singapore Nanyang higher Management College, Rui Mei Aeronautical College and external cooperative colleges. At the same time, Zhongrui Group also has a professional real estate development company Zhongrui Real Estate, the group's real estate background may be conducive to the company to "real estate + education" model for remote expansion of the education sector.
Benefiting from the four driving factors of increasing penetration of studying abroad, upgrading of educational consumption, fierce competition for further studies and strengthening quality education, we are particularly optimistic about the development of the international school industry. It is estimated that if the number of international schools grows at an annual rate of 10%, it is predicted that the demand will exceed the total capacity of 178000 students in 2022; if the annual growth rate is 5%, the demand will exceed the total capacity of 463000 students in 2022. Therefore, we think that in the next five years, international schools may still be in short supply. Therefore, in the next five years, international schools will still be an industry that mainly depends on supply, and the demand side will continue to be in a relatively strong state.
We believe that with the change of the actual controller in the future, Lipeng shares is expected to transform the business of listed companies as a whole to the education industry and the international school industry with the help of the rich resources and experience of the actual controller. Based on the profit forecast of Lipeng's original business, we estimate that from 2018 to 2020, the net profit of return to the mother will be RMB 0.94 trillion, respectively, and the corresponding PE will be RMB 42max, 37max, 36x. Cover for the first time, give buy rating, target price 7 yuan.
Risk hint: the equity transfer has not been completed; the profit status of the original business may be lower than expected and other risks.
