Company dynamic events

The company released 2018Q3 quarterly report that Q3 achieved revenue of 1.003 billion yuan, an increase of 41.05% over the same period last year, and net profit attributable to 79.52 million yuan, an increase of 123.30% per share.

Comments on matters

The revenue growth rate increases quarter by quarter, the former main business is sound, and education contributes to the performance.

In the first three quarters of 2018, the company achieved a total revenue of 2.176 billion yuan, an increase of 37.24% over the same period last year, and a net profit of 130 million yuan, an increase of 158.90% per share. On a quarterly basis, the quarterly revenue growth rates of 2018Q1, Q2 and Q3 were 29.03%, 38.29% and 41.05% respectively, increasing quarter by quarter. The rapid growth of revenue is mainly due to the steady growth of the original main business and the contribution of the Martian era and Kaijie Vision. By the end of this quarter, the company received about 130 million yuan in advance, mainly due within one year, mainly for students of the Martian era and magic vision to pay tuition in advance.

The gross profit margin has increased significantly, the rate of sales expenses has increased rapidly, and the overall profit has improved significantly.

In the current quarter, the company's gross profit margin increased to 25.03% year-on-year, while the comprehensive gross profit margin in the first three quarters was about 24.33%, an increase in 9.40pct over the same period last year, mainly due to education business and higher gross profit margin. In the first three quarters, the total expense rate of the company was about 16.92%, an increase of 5.18pct over the same period last year, of which the sales expense rate increased by 3.05pct to 7.19% compared with the same period last year, and the management expense rate was basically the same as last year. Due to the increase in exchange earnings brought about by the appreciation of the US dollar, the financial expense rate decreased 1.30pct compared with the same period last year. In addition, the R & D expenditure in the current period is 64.47 million yuan, corresponding to the R & D expenditure rate of 2.96%.

Overall, the gross profit growth rate exceeded the expense growth rate during the period, leading to a significant improvement in overall profits. in the first three quarters, the company achieved a total attributable net profit of 130 million yuan, an increase of 158.90% over the same period last year, and the net interest rate increased by 2.80pct to 5.97% over the same period last year. The net interest rates of 2018Q1, Q2 and Q3 were 2.66%, 5.53% and 7.92%, respectively. The company expects the net profit attributable to the company to be about 1.92-215 million yuan in 2018, an increase of 170% over the same period last year.

Carry out cooperation in running schools and promote the cooperation between schools and enterprises

The company has signed a cooperation agreement with Guangxi Information Vocational and Technical College to jointly build a digital art college with an enrollment target of 3000 people. majors include digital media art design, interior art design, game design, film and television multimedia technology, film and television animation and so on. The company is responsible for providing the venue for running the college, and the annual balance of the college can be allocated according to 55% of the working capital.

The Mars era has a corresponding curriculum system and teachers, and cooperation with colleges and universities in running schools will help to give full play to the advantages of existing resources, expand campus influence, and gradually improve the enrollment ability of campus channels and word-of-mouth channels. drive income and performance growth.

Investment suggestion

As the company's profit improved slightly more than we expected, and the magic vision combined with the table, we raised the company's profit forecast. It is estimated that the company's vested net profit from 2018 to 2020 will be 2.03 million yuan, respectively, and the corresponding EPS will be 0.51, 0.64 and 0.79 yuan per share, respectively, and the corresponding PE will be as much as 16-13-11 (calculated on 2018-10-23 closing price 8.43 yuan per share). The company's rapid growth in the Martian era, and the acquisition of Kai Meng Vision deepens the layout of the upstream and downstream of the education industry chain, opens the cooperation between schools and enterprises to create new performance growth points, is optimistic about the future development prospects of the company's education business, and the company's current valuation is low. Maintain the "overweight" rating.

Risk hint

The risk of uncertainty brought by stricter supervision, the risk of aggravating market competition, the failure of business development to meet expectations, the risk of impairment of goodwill, and so on.