The company's performance in the first half of the year was affected by the epidemic and fluctuated greatly, but the resilience of the education business was highlighted, and Ovia's net profit fell only 9%. In the future, the chemical business is expected to be spun off gradually, the business will further focus on the informationization of education, and the dividend of the superimposed industry will gradually show, which will have great growth potential for a long time. Maintain the company's 2020-22 EPS forecast to 0.52 / 0.72 (0.61 / 0.84), the current price corresponding to the 2020-22 PE is 32-23-22 times, maintain the "buy" rating.
Asset disposal and epidemic situation affect performance, and changes in business structure drive up gross profit margin. 1) Revenue and profit: the company's 1H20 revenue is 202 million yuan (- 63.7%), the return net profit is 32.33 million yuan (reverse loss 49.14 million yuan), and the non-net profit is 2.46 million yuan (- 79.40%). The non-recurrent profit and loss includes 25.41 million yuan of investment income from the sale of Changshu new materials and new materials sales. The decline in revenue is mainly due to the fact that the subsidiaries sold are no longer consolidated since March and the business development in the first half of the year was affected by COVID-19 's epidemic situation. 2) profitability: 1H20's gross profit margin is 38.34% (+ 18.4pcts), of which 2Q20 gross profit margin is 50.42% (+ 25.9pcts), mainly for the purchase of part of the chemical business with low gross profit margin, and the proportion of high gross profit education business increases. The rate of sales / management / R & D expenses of 1H20 Company is 16.51%, 19.26% and 13.21%, respectively, which increases 9.4/12.1/7.8pcts, mainly because of the relative rigidity of employee salary and depreciation expenses. 3) Cash flow: the net operating cash flow of 1H20 was 47.38 million yuan, an increase of 101 million yuan over the same period last year, mainly due to the collection of accounts receivable and tax refund in the previous period.
The resilience of the education business is highlighted under the epidemic situation, and the chemical business is gradually optimized. 1) Educational informationization: 1H20 Ovia realized income of 87.55 million yuan (- 14%), deducting non-return net profit of 23.15 million yuan (- 9%). It is mainly due to the suspension of school classes during the epidemic, which leads to difficulties in business development. It recovered one after another in April and May. 2) Chemical industry: the income of Changshu Zhenfu new material, a subsidiary of 1H20, is 101 million yuan (- 48%), and the net profit is 4.65 million yuan (- 76%).
The decline in chemical business is mainly due to insufficient operating rate during the epidemic, difficulties in business development and sluggish downstream demand. In March of 20 years, the company completed the industrial and commercial change procedures for the transfer of assets for the sale of new materials and new materials in Changshu. In the future, the company is expected to gradually set up chemical business and focus on educational informationization.
The landing of orders in the second half of the year is expected to lead to growth, and the process of long-term education informatization will be further deepened. 1) in January 2020, the company signed a service contract with China Mobile Construction for a period of 158 million yuan for a period of three years to provide system integration services for Henan Education Informatization Development Fund project. In May, he signed an order contract of 28.58 million yuan for a period of three years with the Education and Sports Bureau of Weihui City, Henan Province. 1H20 Ovia signed a total of 717 sales contracts, totaling 107 million yuan. Considering the arrival of more new orders and the arrival of the peak season of education procurement in the second half of the year, we are optimistic about the growth of education business in the second half of the year. 2) the epidemic situation accelerates the process of educational informatization. Affected by the epidemic, universities and primary and secondary schools across the country have carried out the work of "suspending classes and non-stop learning", and the company's Ovia platform also provides live broadcast of famous teachers, online teaching and research, and emergency meetings to the whole country free of charge. As of June 30, Ovia has covered 32 provinces and 544 districts and counties across the country, providing more than 70,000 live broadcast services. In the future, with the end of the epidemic and the "three classes"
With the promotion of educational informatization 2.0 policy, it is expected that the market penetration of educational informatization will further increase, and Ovia as one of the market leaders is expected to benefit.
Risk factors: retention of fluorine chemical assets performance downside risks, education recording and broadcasting industry competition leading to downward profit margins, rising human resources costs and other risks.
Investment suggestion: the company's chemical business is expected to be spun off gradually, further focus on educational informationization, superimposed industry dividends are gradually apparent, and have great growth potential for a long time. At the same time, considering the impact of the epidemic in the first half of the year, the company lowered its forecast for 2020-22 EPS to 0.52 EPS 0.73 yuan (the original forecast was 0.61 pound 0.73 / 0.84 yuan), and the current price corresponding to 2020-22 PE was twice as much as that of 32-23-22, maintaining the "buy" rating.