Investment logic:
The national will of the education information industry has a high long-term certainty and pays attention to the software-platform product opportunities in the 2.0 period.
Since 2012, the national financial expenditure on education has been maintained at more than 4% for seven consecutive years, of which 7-8% has been invested in the field of educational informatization. We estimate that the expenditure on educational informatization is expected to exceed 380 billion yuan in 2020. In the short term, due to the impact of government tax and fee cuts and macro-economy, the growth rate of government revenue slows down, which has an impact on the investment in education in the short term. we believe that in the long run, education is still an important issue of people's livelihood. the State Council has made it clear that it is necessary to ensure that public budget expenditure on education is only increased, and the scale of the industry is expected to maintain growth. Since the period of educational informatization 2.0, we believe that as the promotion of the "three links" and the two platforms is coming to an end, the follow-up opportunities of educational informatization mainly lie in software-platform products. The proportion of educational information products in educational fixed assets increased from 6.07% in 2014 to 6.88% in 2019, of which the proportion of software products in information equipment increased from 14.24% to 21.36%. It shows that the growth rate of information assets and software assets is higher than that of school fixed assets. According to SmartShow2019 statistics, the proportion of users who pay attention to the information platform in 2018 is close to 50% and is increasing year by year. Platform system products have become the first category of educational informatization.
Education cloud leader, short-term focus on brand + channel advantages to promote the landing of the project, long-term optimistic about data precipitation to build barriers. The company is the leading enterprise of the national education cloud platform. At present, it has built 16 provincial platforms, 120 prefecture and city platforms and 800 district and county platforms. The national education cloud platform has a market share of 65%, with significant scale advantages and channel advantages. The company builds its brand advantage by undertaking national projects and repeatedly winning national awards. With the cloud platform as the center, the company constantly makes an endogenous + extension layout around the intelligent education product system that integrates teacher teaching, student learning, education departments and school management, and enriches the product system. Under the background of the upward move of educational information procurement level, enterprises with the advantages of comprehensive product service provision and channel resources are expected to be the first to benefit. In the long run, the company's cloud products have launched 12.83 million teachers' spaces, 6.1 million students' spaces, 5.61 million parents' spaces, 400000 school spaces and 9.9 million real-name certified online learning spaces on the national educational resources public service platform. At the same time, the company has launched intelligent learning, management, evaluation, research and other C-end products, which is expected to precipitate massive C-end data. By fully mining the value of data to build teaching and management system barriers.
The traditional main business is relatively stable, and the employee shareholding of the subsidiary ensures that the incentive is in place. The company's traditional main business includes intelligent IC cards and intelligent financial terminal products and services, smart IC cards are accelerated by ETC and 5G enabling, financial terminals are increased by new products with high gross profit margins such as QR codes, the company's traditional main business maintains an average annual gross profit of about 400 million, and the performance safety pad is relatively stable. The company's important subsidiaries implement employee stock ownership mechanism. at present, Tianyu Education employees own 20%, Juilian Network employees hold 49%, and Baiwang Information employees hold 20%. In addition, two war investment institutions, Shenzhen Qianhai Fumei and Wuhan Credit Investment, have been introduced into the education subsidiary, the management mechanism tends to be improved, and the binding of interests is expected to drive performance growth.
Profit forecast: we expect the company's return net profit from 2019 to 2021 to be RMB 2.24000,000, corresponding to the PE of 187m in 21-31-25, covering for the first time and highly recommended.
Risk hint: the traditional main business has dropped sharply, and the intelligent education business has not been promoted as expected.