Company dynamic events
The company announced its three-quarter report in 2019, with revenue of 5.828 billion yuan, an increase of 6.38% over the same period last year, a net profit of 747 million yuan, an increase of 24.56%, and a net profit of 713 million yuan, an increase of 29.77% over the same period last year.
Comments on matters
The sales of general book publishing business increased sharply, and the gross profit margin of teaching material teaching and auxiliary publishing business increased significantly. The company's general book publishing business achieved sales of 1.866 billion yuan in the first three quarters of 2019, an increase of 18.52 percent over the same period last year, and realized revenue of 622 million yuan, an increase of 8.67 percent over the same period last year. The general book sales of the company is growing rapidly, especially children's books. The company's best-selling book "Rice Circle Series" has become the most representative extracurricular reading for the middle and lower grades of primary school. In the August retail list of children's books released by open-book books, the "Rice Circle" series occupies 19 kinds of bestsellers Top30. Due to the relatively high proportion of e-commerce channel sales of children's books and frequent discount activities, the growth rate of general book revenue of the company is slightly lower than that of Ma Yang. The company's teaching materials and auxiliary business maintained a steady momentum of development, and the code and income of the teaching materials publishing and distribution business achieved positive growth in the first three quarters. Benefiting from the cost control of the company's own educational publishing products, the company's gross profit margin for teaching materials and student aid books increased significantly by 5.01 percentage points, leading to a positive increase in the company's comprehensive gross profit margin.
The return of value-added tax and the growth of investment income further increase the growth of the company's net profit due to the higher profit growth of the company's associate, Tibet Venture Capital, in the first three quarters, resulting in a significant increase in the company's investment income in the associated company according to the equity method. In addition, due to the time lag in the implementation of the VAT first levy and then refund policy for publishing enterprises, the VAT refund received by the company this year has increased by about 50 million yuan compared with the same period last year. Superimposed company's main book publishing and distribution business continued to maintain steady growth, and multiple factors contributed to the higher-than-expected growth of the company's net profit and net profit in the first three quarters.
Profit forecast and valuation
The company's educational publishing business is developing steadily, and the general book business is growing rapidly.
Series brand effect is significant. We continue to be optimistic about the future development of the company. It is estimated that the net profit of the shareholders belonging to the parent company from 2019 to 2021 is 1.156 billion yuan, 1.295 billion yuan and 1.449 billion yuan respectively, and the EPS is 0.94 yuan, 1.05 yuan and 1.17 yuan respectively, corresponding to 13.14,11.73 and 10.48 times of PE.
Risk hint
Policy risk; intensified competition in industry; fluctuation of raw material price; risk of failure of government bidding; increase of channel discount; promotion of children's book business is not as expected.
