Main points of investment:
The company issued a third-quarter results announcement: the company's revenue in the first three quarters of 20 years was 270 million yuan, down 44.7% from the same period last year, and its mother's net profit was 102 million yuan, an increase of 22.3% over the same period last year. Of this total, Q3 revenue was 140 million yuan, down 32.0% from the same period last year. Looking at education business alone, there was a significant improvement compared with the first and second quarters. The net profit was 125 million yuan, an increase of 153.9% over the same period last year. Mainly due to the divestiture of the machinery business, the investment income of 120 million yuan was confirmed in the third quarter, corresponding to the net profit of about 84 million yuan. Excluding this influence factor, the net profit of Q3 exceeded 40 million yuan, which was also a significant improvement compared with the losses in the first and second quarters.
Q3 completed the transfer of 100% stake in Dalian third Base Technology, resulting in a substantial increase in net profit compared with the same period last year. The company announced on July 7 that it intends to transfer its 100% stake in Dalian third base technology for nearly 250 million yuan, and on August 22, both sides of the transaction completed the industrial and commercial change of third base technology, thus the listed company became a pure education company. According to the plan, the company confirmed 50% of the transfer price in Q3, about 124 million yuan as investment income, and the remaining 50% is expected to be recognized in Q4, resulting in a total investment income of nearly 250 million yuan this year, resulting in a substantial increase in the company's return net profit, affecting the net profit of about 170 million yuan.
In terms of profitability, gross profit margin fell 15.65pct to 51.9% year-on-year, while net profit margin was affected by investment income, rising 17.16pct to 43.4% year-on-year. The company's gross profit margin fell in the first three quarters compared with the same period last year, and the education business revenue is expected to decline due to the epidemic, but the product sales costs and staff costs have not declined to a corresponding extent. In the first three quarters, the rate of sales expenses increased to 9.7% compared with the same period last year, the rate of R & D expenses decreased by 0.34pct to 2.4% year-on-year, and the rate of management expenses increased to 30.1% year-on-year, which is expected to be mainly due to the usual payment of employee salaries and rental fees during the epidemic.
The operation of Mei Jim's early education has improved significantly. At present, nearly 500 stores that Mei Jim has opened have basically resumed classes. at present, the Xinjiang region has been affected by the epidemic, but the number of local stores is small. At the operational level, the sales volume of the company in August and September is close to the level of the same period last year, but there is still a gap in revenue. As the business level continues to improve, Q4 is expected to further narrow the gap.
In addition, the company responded to the epidemic at the beginning of the year and launched online business in a timely manner. On the day of launch, the number of user registrations exceeded 100000. By the end of the third quarter, the country's total registered users are expected to be nearly 1 million, of which more than 80% are new users. Online courses are currently free courses, mainly to help offline store drainage and improve the quality of service.
Adjust profit forecast and maintain "overweight" rating. The company will spin off its machinery business and become a pure education company, and its profitability and valuation are expected to rise at the same time. Due to the recognition of an one-time investment income of 248 million yuan in 2020, the company's net profit in 2020 will be about 170 million yuan, so we raise our profit forecast to 2.40,1.54 and 194 million yuan in 2020-2022 (the original forecast is 0.42,1.40 and 173 million yuan). After excluding the profit affected by investment income in 2020, the net profit is about 70 million yuan, of which Q4 is about 44 million yuan, which is slightly higher than the net profit of about 41 million yuan of Q3 excluding the impact of investment income (Q3 net profit of 125 million yuan, excluding about 84 million yuan of profit affected by investment income, the remaining 41 million yuan), which is in line with our expectation of quarterly improvement in education business. In 20-22, the corresponding PE is 25, 37, 31 times, maintaining the "overweight" rating.
Risk hint: the number of shops opened is not as expected; the number of newborns has fallen sharply.