The company released the 2019 mid-term report: 19H1 achieved revenue of 1.09 billion yuan (+ 13.16%YoY), deducting non-return net profit of 43.3866 million yuan (+ 1.98%YoY).

During the reporting period, the company's main education and training business achieved business income of 9.40 yuan, an increase of 12.7% over the same period last year, accounting for 86.31% of the company's operating income. Among them, K12 education developed steadily and rapidly as a whole, with a business income of 837 million yuan in the current period, an increase of 15.3% over the same period last year, while vocational education achieved a business income of 94.0226 million yuan. The company has added 41 new teaching centers in 19H1, 13 have been expanded and relocated, and the number of directly operated teaching centers has increased to 290, covering Shanghai, Jiangsu and Zhejiang and other regions.

2015-the gross profit margin of 2019H1's overall business remains between 39% and 44%, while the gross profit margin of the education sector is slightly higher than that of the overall gross profit margin of 44%. In terms of net interest rate, the company's 15-19H1 net interest rate is basically maintained at about 4%, with stable development.

In terms of three fees, the sales expense rate of the 19H1 company increased rapidly during the period, mainly due to the company's rapid expansion of the teaching center, labor costs and marketing expenses increased, and the management expense rate decreased significantly, mainly because the company's management expenses only increased by less than 2% compared with the same period last year, while revenue increased significantly. The increase of time deposit interest income of the company's 19H1 bank makes the financial income increase significantly.

Profit forecast and investment rating: we are optimistic about the stable development of Onli Education and believe that it can continue to infiltrate K12 middle school students in Jiangsu, Zhejiang and Shanghai by relying on the reputation of "Onli Education" for 30 years. We adjusted the company's profit forecast to 1.62,2.09 and 235 million yuan respectively, the EPS was 0.56,0.73,0.82 yuan respectively, corresponding to the closing price of 8.29.The PE was 34,26,24 times respectively, maintaining the "prudent overweight" rating.

Risk hint: Kmur12 Education Policy risk, expansion effect is not as expected, etc.