Brief comment on performance
In the first half of 2018, the company achieved revenue / return net profit of 969 million yuan / 97 million yuan respectively, an increase of 14.56% and 6.02% respectively over the same period last year, and fully diluted EPS0.09 yuan. The revenue was in line with expectations, and the performance was slightly lower than expected.
Business analysis
The marketing network continues to expand and the piano business grows steadily. In the first half of 2018, uncertainties in the economic environment increased and trade frictions escalated. Under the background of the continuous downturn of the global piano market, the company continues to expand its marketing network and strengthen the construction of specialty stores in China, checking and accepting a total of 250 stores from January to June. Through the expansion of sales channels, the company further covered the blank market, ensuring that piano sales increased steadily. In the first half of 2018, total piano sales increased by 7.77% over the same period last year. Piano and accessories products recorded revenue of 929 million yuan, an increase of 15.63% over the same period last year, increasing the growth rate of 4.78pct.
The business of culture and education has maintained rapid development. The company continues to promote the development of art education industry, continuing the high growth rate of the second half of 2017 in the layout of art classrooms, with a total of more than 200 newly developed Pearl River piano classrooms and 626 partners. On the other hand, the Cultural Industry Innovation and Entrepreneurship Incubator project has been promoted as scheduled and has entered the stage of market research and promotion. With the smooth completion of the project in the future, the company will further expand the territory of the cultural industry.
Post-piano service market is expected to become a new business growth point. The company's piano fun technology has created "91 piano interest", "91 tuning", "Piano Cloud School" and other Internet music education service platforms. In the first half of 2018, the company increased the marketing and user development of Piano Cloud School, and upgraded the tuning business to "piano cloud after-sale", accelerating the formation of a "manufacturing-rental-service-education" industrial chain closed loop. At the same time, the company plans to launch external financing for the above cloud service platforms and introduce strategic investors and Internet professional teams. In the first half of 2018, Qinqu Technology completed the sale of 2102 cameras and tuning of pianos in Yunxue School, achieving a main business income of 5.9367 million yuan. If the external financing plan of the instrument cloud service platform can be implemented smoothly in the future, with the help of capital, it is expected to become a new business growth point of the group.
Profit forecast and investment suggestion
The company maintains steady growth in the main piano business, and maintains the momentum of actively extending and expanding the cultural and educational industry, and enlarges the cultural territory on the basis of strengthening the main piano industry. We maintain the company's 2018-2020 fully diluted EPS forecast of 0.19, 0.23 and 0.27 yuan, corresponding to the PE of 33-27-23, respectively, and maintain the company's "buy" rating.
Risk factors.
The investment schedule is less than expected risk; the industry competition aggravates the risk; the management risk of the cultural industry expansion; the risk of the industry market downturn.
