The company disclosed the three quarterly results of 2019: from January to September 2019, the company's revenue increased by 16.55% to 1.628 billion yuan, the net profit returned to the mother increased by 19.03% to 226 million yuan, and the non-net profit deducted by the mother increased by 22.78% to 207 million yuan. In Q3 in 2019, the company's revenue increased by 24.13% to 592 million yuan, and its net profit increased by 13.67% to 88 million yuan.
The performance was basically in line with expectations, and the book business grew steadily by 15%.
The company's quarterly results are basically in line with market expectations, according to the revenue structure of the branch: 1) from January to September 2019, the revenue of the book business reached 641 million yuan, an increase of 14.67% over the same period last year, and the corresponding gross profit margin was 56.16%. It is basically the same as the same period last year. In Q3 in 2019, the revenue of the book business reached 213 million yuan, an increase of 17.44% over the same period last year, and the gross profit margin decreased by 10pp compared with the same period last year, probably due to the increase in the proportion of teaching and auxiliary business with low gross profit margin. 2) from January to September 2019, the circulation of periodicals was 978100 copies, down 3.8% from the same period last year, mainly because digital reading had an impact on the sales of popular journals; confirmed service and advertising revenue was 46 million yuan, an increase of 99.4% over the same period last year. Signed advertising orders were 539700 yuan, an increase of 304.3% over the same period last year.
Financial data: improved operational efficiency and rich cash on hand
From January to September 2019, the company's gross profit margin was 27.26%, an increase of 0.31 ppm over the same period last year; the management fee was lower by 0.34pp than the same period last year; the sales rate was 0.76ppp lower than the same period last year; and the homing net profit rate was 13.91%, an increase of 0.29pp over the same period last year. By the end of the reporting period, the company has 3.275 billion yuan of monetary funds and is rich in cash on hand, supporting the company's subsequent expansion of digitalization and internationalization.
Investment suggestion: it is estimated that from 2019 to 2021, the revenue of the company will be RMB 2.510 billion, the net profit of parent will be RMB 4.86 million, and the corresponding EPS will be RMB 0.62; the PE corresponding to the closing price on October 29, 2019 will be 19.09X/17.03X/15.25X. We maintain the company's fair value per share of 14.92 yuan per share, corresponding to the 2020 PE valuation of 21.6 times, maintain the "buy" rating.
Risk tips: overseas institutional cooperation risk; paper price fluctuation risk; mobile reading impact; primary and secondary school teaching assistance market competition intensified; knowledge service business development progress is not as expected.