Key investment events: The company released its 2018 annual report, achieving revenue of 1,454 billion yuan, a year-on-year increase of 48.25%; realized net profit to mother of 98.5987 million yuan, a year-on-year decrease of 38.41%. It is proposed to distribute a cash dividend of $0.15 (tax included) for every 10 shares to all shareholders. The performance was in line with expectations, and the transformation was gorgeous: the company achieved revenue of 1,454 billion yuan in 2018, an increase of 48% over the previous year. The main source of revenue was the vocational education sector, which achieved revenue of 1,161 billion yuan, an increase of 89% over the previous year, accounting for 79.8% of revenue. The company achieved net profit of 98.5987 million yuan, a year-on-year decrease of 38.41%, mainly due to the vocational education business achieving net profit of 140 million yuan, an increase of 11.34% over the previous year. The vocational education sector's net profit withheld from non-mother was 143 million yuan, accounting for 143.16% of the overall profit. In April 2019, the company divested the traditional manufacturing business, optimized its business structure and deepened the field of vocational education. The governance structure was continuously optimized, and it has become one of the purest professional education standards for A-shares. The divestment of the loss-making business is expected to achieve restorative growth in the future: the company's net profit in 2018 can be obtained. Hengqi Education's finance, self-examination, and design business achieved net profit of about 180 million yuan, but the IT business lost more than 40 million yuan, and the full credit depreciation was 21 million yuan, making Hengqi Education's annual net profit only 120 million yuan; CUHK Yingcai achieved net profit of 27.47 million yuan; the instrument business lost about 18.95 million yuan, dragging down the listed company's performance by only 98.59 million yuan. In 2019, Hengqi suspended its IT business, which will no longer be a loss drag, and completed the divestment of its original main business in April 2019. The two together affected the net profit of listed companies by more than 80 million yuan in 2018, and there will be no impact in 2019. It is expected that listed companies will achieve restorative growth in 2019. Hengqi Education: “1+4" multi-track expansion, deep cultivation of O2O model, heavy R&D drive. Hengqi Education is a leader in practical accounting training in China. It continues to expand the vocational education circuit. It has developed into a diversified vocational education platform with multiple track layouts and deep cultivation of the O2O model online and offline. In 2018, Hengqi Education achieved revenue of 1.09 billion yuan, an increase of 80% over the previous year; net profit of 120 million yuan, an increase of 10.4% over the previous year, and the performance continued to increase. In terms of terminal campuses: Hengqi currently has 397 campuses, adding 70 new outlets in 2018, and is expected to maintain a layout of around 50-80 new outlets every year; in terms of track expansion: Hengqi uses methods such as introducing content and granting shares to bind high-quality content teams to rapidly expand “1+4”, or “academic education (self-examination)” + “financial+teacher qualification+physician qualification+civil servant”. Hengqi is also increasing investment in R&D to build an artificial intelligence interaction system for students to enhance the core competitiveness driven by product technology. It is expected that performance will continue to increase in the future. CUHK Talents: Deep integration with Hengqi and two-way promotion to break through the “network and no school” pain point. CUHK Yingcai is a high-quality domestic online vocational education platform. In 2018, CUHK Yingcai achieved revenue of 94.11 million yuan, an increase of 48% over the previous year; net profit of 27.47 million yuan, an increase of 17.5% over the previous year, and profitability increased steadily. In the future, CUHK talents will take advantage of traffic, expand the marketing team to enhance marketing capabilities and increase the transaction rate of high-customer unit price courses; further develop course products, focusing on 1-3 core products such as builders, social workers, and physician qualifications; and use their own user and traffic advantages to develop collaboratively with the promotion capabilities of Hengqi's 400 offline network terminals across the country to break through the “online and no school” pain point of traditional online schools and achieve integration of high-quality teacher resources and content resources. It is expected that future profitability will be further strengthened. Profit forecast and investment advice: EPS is expected to be 0.47 yuan, 0.58 yuan, and 0.74 yuan respectively in 2019-2021, and net profit to mother will maintain a compound growth rate of 30% in 2019-2021. In view of factors such as the company's multi-track layout and the country's vigorous promotion of the development of vocational education, there is still plenty of room for future vocational education development. The company was given a 30-fold valuation in 2019, corresponding to a target price of 14 yuan, maintaining a “buy” rating. Risk warning: Risks such as changes in the vocational education policy environment, falling short of expectations in Hengqi Education enrollment, declining customer unit prices due to increased market competition, and falling short of expectations in the divestment of traditional main businesses.