Event
On September 25, 2019, Kaiyuan shares issued an announcement and the company held the 35th meeting of the third session of the board of directors, which resolved that Mr. Luo Xudong, former chairman of the listed company, resigned from the post of director and chairman of the listed company. Mr. Jiang Yong, founder, chairman and president of Heng Enterprise Education, served as chairman of the listed company, and Mr. Zhao Jun, founder and chairman of CUHK, served as general manager of the listed company.
Comment
Jiang Yong / Zhao Jun became chairman / general manager, and the improvement of corporate governance structure has made great strides forward. March 1, 2017 began the company's permanent enterprise education & CUHK talent business. On March 13, 2019, the company announced the proposed sale of Changsha Kaiyuan instrument Co., Ltd., a wholly owned subsidiary of the manufacturing industry, thus completing the divestiture of the manufacturing business, focusing on education and training, and transferring it to Mr. Luo Jianwen, the controlling shareholder of the listed company. the transaction price is 271 million yuan. On April 8, 2019, the company issued a notice on the completion of industrial and commercial changes in wholly-owned subsidiaries of the manufacturing industry. Kaiyuan Co., Ltd. completed the relevant industrial and commercial change registration and articles of association filing procedures, and has been changed into a limited liability company wholly owned by Mr. Luo Jianwen. Kaiyuan shares completed the divestiture of the traditional instrument business in April 2019, and became a pure education company after the divestiture. Now Jiang Yong, the former chairman of Heng Enterprise Education, and Zhao Jun, the talented chairman of CUHK, serve as the chairman and general manager of listed companies respectively, which is expected to further optimize the governance structure of listed companies and promote the efficient development of education business.
The total shareholding of the company's education business executives increased, and Zhao Junzeng, chairman of CUHK's elite, showed confidence to 7.19%. As of September 24, 2019, Luo Jianwen, the former chairman of the listed company, and Luo Xudong, the former general manager, held 13.28% / 7.79% of the equity respectively. Jiang Yong, chairman of Heng Enterprise Education, Zhao Jun, chairman of CUHK, and Zhongda Ruize, who acted in unison, respectively hold 9.61% of the equity of the listed company. And Zhao Jun and CUHK Ruize increased their holdings of listed company shares at a premium of 33% by 12 yuan per share on September 4, 2019, with a total increase of 220 million yuan, which greatly exceeded the total amount of 115.2 million yuan plan issued on July 6, 2019, and the shareholding ratio increased to 7.19% from 1.87% before the increase, showing the strong confidence of the company's education executives in the future business development.
Investment advice: an important change in the company is the purification of the business, and we believe that with the improvement of the governance structure, the operation is expected to continue to improve. Due to the dual factors of the one-time loss caused by the divestiture and the higher-than-expected increase in expenses during the growth business development period, the company's profit is expected to be low in 19 years. We lowered our 19-year profit forecast by 73%, and then maintained the original annual forecast. It is estimated that the 20-year return net profit of 19pm will be RMB 0.42 trillion, the 20-year PE valuation is 22x, and the target price is 14 yuan, maintaining the "buy" rating.
Risk hints: goodwill impairment risk; intensified competition; divestiture has a certain impact on net profit and other risks.
