Core opinion: Q3 revenue growth was impressive, and losses were reversed in the quarterly results. Doushen Education recently released its three-quarter report. The first three quarters achieved revenue of 1,300 million yuan, a year-on-year decrease of 1.65%; net loss of 115 million yuan after deduction. Among them, Q3 achieved revenue of 590 million yuan in a single quarter, a year-on-year increase of 39.7%, with impressive performance; in terms of performance, net profit of Q3 was 1,26,000 yuan, net profit after deduction of 7.476 million yuan, which is narrower than the previous two quarters. Big Language's revenue for the first three quarters was 325 million yuan, up 36% year on year. The peak of registration was delayed to Q3, and the online business led to a significant increase in the number of students enrolled in major languages. The peak of registration for major languages has been delayed due to the pandemic. According to the Three Quarterly Report, the number of applicants for Q3 was 109,000, an increase of 78.0% over the previous year, and the cumulative number of enrolled students was 95,000, an increase of 121.8% over the previous year. The number of registrations and enrolments for Q3 of the branch school business was 38,754 and 33,291, respectively. Due to the outbreak in Beijing, summer offline courses did not start normally, but as of Q3, the number of students enrolled in fall classes had resumed growth. The number of students enrolled at Doushen Online School in Q3 was 61,336, which led to a significant increase in the overall number of students enrolled. Among them, the number of long-term students (ARPU5000 yuan or more) and short-term courses was 23,321 and 38015, respectively. This year, Doushen Online School added a small class of 6 students (ARPU 11,400 yuan). The number of students enrolled in Q3 was 6801, an increase of about 10% per month. The company expects a revenue contribution of 1.5 to 250 million yuan in 2021. The fixed increase plan has been revised again, and the equity incentive plan shows management confidence. The company recently issued the “Plan on Issuance of Shares to Specific Targets (Second Revision)”. The amount raised was raised to 2 billion dollars, and the pricing method was changed to inquiry. Due to policy reasons, the issuance target was changed to no more than 35 qualified investors. Furthermore, a draft of the company's equity incentive plan was released. It is proposed to grant 18.75 million shares to 70 executives and core personnel, with Dou Xin accounting for 44.0%. The assessment target is for revenue growth of not less than 100%/200%/350% in 21-23 compared to '19 (compound growth rate of 46% in 19-23). If completed successfully, Dou Xin's shareholding will rise to 9.34%. Continuing to be optimistic about the growth potential of the language training circuit, the company is expected to continue to expand online/offline with its brand and system advantages. EPS for 20-22 is expected to be 0.09 yuan/share, 0.38 yuan/share, and 0.62 yuan/share, respectively. Referring to comparable companies, the company was given a valuation of 31.5X EV/EBITDA in '21, with a reasonable value of 16.93 yuan/share, maintaining the “increased holdings” rating. Risk warning. The pandemic has affected the resumption of offline classes; major language renewal rates and new enrollment have fallen short of expectations.