Incident: 2020H1, the company achieved revenue of 127 million yuan, a decrease of 54.1%, net profit of 22.82 million yuan, a decrease of 166.6%, net profit after deduction of 21.99 million yuan, a decrease of 160.6%. Comment: There are more than 400 Megam reopening centers. Affected by the domestic epidemic, 2020H1 Megem's revenue was 56.86 million yuan, a decrease of 67.9%, and net profit of 17.34 million yuan, a decrease of 81.2%. The company exempted the initial licensing fees for all domestic franchise centers, direct-run centers, and trusteeship centers in the first half of the year. Currently, the number of contract centers is 535, an increase of 11 over the end of 2019, bucking the trend and expanding. Customers in the early childhood education industry are young and resume classes late. They only resumed classes one after another in late May. Currently, 418 centers have resumed classes, laying the foundation for H2 to resume growth. The sub-brand “Little Jim”, which focuses on the third and fourth tier markets, has now signed contracts with 8 centers. The gross margin of the early education business also decreased by 7.07pct to 70.30%, and the net profit margin also decreased by 21.44% to 30.49%. Virtue education has been affected by the overseas pandemic. The epidemic began to spread globally in late March. In Q2, some customers delayed or changed their study abroad plans, which had an impact on the study abroad training business. In 2020H1, Kaide Education's revenue was 20.6 million yuan, a decrease of 14.9%, and net profit of 3.99 million yuan, a decrease of 45.0%. Gross margin also decreased by 10.61 pct to 44.64%, and net profit margin decreased by 10.58 pct to 19.35%. Third Base Technology has completed the divestment. In August 2020, the company divested Sanji Technology, a subsidiary in the machinery manufacturing business, at a price of 249 million yuan. The company became a pure education company, which is conducive to business focus. Furthermore, Mr. Liu Junjun, one of the founders of Megim, served as the company's chairman, which also reflects the company's determination to develop early childhood education business. Investment advice: 2020H1 Megam has been affected by the domestic epidemic. Currently, the resumption of classes is good, and H2 is expected to improve. The original main business was divested, and Megim's founder became the company's chairman, demonstrating the company's determination to develop the early childhood education business. Maintain the profit forecast of 2.46/1.80/205 million yuan from 2020 to 22, with a corresponding valuation of 24x/33x/29x, and maintain the “buy” rating. Risk warning: The recovery of early childhood education business after the pandemic did not meet expectations, and the study abroad training business continued to be affected by the overseas epidemic.