Event Overview The company's 2020Q1-3 revenue/net profit from the net profit/net profit of the deduction of net profit was 13.03/-0.93/-115 million yuan, down 1.65%/257.09%/288.12% from the previous year; the higher net profit was higher than the deduction mainly due to government subsidies of 1975 million. Q3 Single quarter revenue/net income from net profit/net profit after deducting non-net profit of 5.90/0.01/-0.07 billion yuan, a year-on-year increase of 39.74%/-94.03%/-131.74%. Revenue growth increased slightly month-on-month, net loss from non-performance. Analysis and judgment: The gross margin/net margin for the first three quarters of 2020 was 27.26%/-7.17%, down 12.29/11.67PCT from the previous year. On the one hand, the sales/management/R&D/financial expense ratio was 10.40%/17.64%/5.57%/5.04%, up -3.69/4.43/2.34/0.15PCT from the previous year. The increase in management expenses was mainly due to increased labor costs, and the increase in R&D expenses was mainly due to a 70% year-on-year increase in R&D expenses to 72.59 million. 95.16 million. Expense+capitalized R&D investment in the first three quarters totaled about 168 million yuan; on the other hand, other income/revenue was 1.77%, up 0.95PCT year on year, mainly government subsidies; investment income/revenue was 0.23%, up 1.69PCT year on year; asset impairment loss/revenue fell 0.74PCT to 0%, and credit impairment loss/revenue increased 0.94PCT to 0.94%. Major language services: (1) Enrollment and enrollment continued to grow at a high rate. Revenue fell slightly short of expectations (160 million), and revenue declined month-on-month from summer to autumn. Registration and enrollment: The number of students enrolled in 2020Q3 was 108,519, up 77.96% year on year ((H1 was 116632, up 70.90% year on year). Affected by the pandemic, the peak enrollment period in 2020 was delayed from 4-6 months to July-September; the cumulative number of students enrolled in 2020Q3 in the current period was 94627, up 121.79% year on year (H1 was 117360, up 126.59% year on year), of which 33291 were offline (H1 was 48094, last year) 81,586 for the whole year), 61,336 online (69266 in H1, 206,588 for the whole year of last year). Due to the pandemic, offline summer courses at the Beijing branch failed to start, so the number of summer students enrolled nationwide was lower than the same period last year. The number of students enrolled in various cities in the fall has increased after the full resumption of classes. Receipts and revenue: The 2020Q3 major language learning business received cash receipts of $95.7 million ($487/148.23 million for Q1/2), confirmed revenue of $143.18 million ($9001/91.54 million for Q1/2), and achieved net profit of around 10 million yuan. Cash receipts declined month-on-month, but sales were confirmed to increase month-on-month. Payment and tuition unit prices: The unit price per capita of the 2020Q3 payment scale is 1,041 yuan, down 29% from H1's 1,469 yuan, online is 640 yuan, and is 37% lower than H1's 1,016 yuan. It is estimated that it is related to changes in the length and fees of newly enrolled fall courses; the per capita unit price for the consumption caliber is 2,269 yuan, up 18% from H1's 1923 yuan, and online is 635 yuan. It is estimated that it is related to free discounts for some courses in the first half of the year. (2) Doushen Online School is developing rapidly. The online six-person small class is expected to contribute 150 to 250 million dollars in revenue next year. The number of current students enrolled in 2020Q3 online was 61,336, mainly long-term students (23,321 for ARPU over 5,000 yuan), including: 6,801 online six-person small classes, 2,951 online celebrity classes, 13,569 online school live classes, and 38,015 online short-term courses. The online six-person class business (ARPU average is 11,400 yuan, which is the same as the branch business) is an additional business (“air branch”). The number of students increased by about 10% the following month, ranking second only to Beijing in volume. It is expected that the number of students enrolled next fall will rival the Beijing branch and reach the total number of students in all schools outside of Beijing. The estimated revenue of the “air branch” in 2021 will reach 1.5 to 250 million yuan. In the first half of 2020, the company successfully accepted students, teachers, and courses in Mingxi's big language. Currently, it is still in the integration period. Some students began normal renewal in September 2020, and the number of long-term Q3 students was 2,793 (not included in the statistics on the number of students that year). It is expected that 2021 will return to normal and income confirmation. Investment suggestions: Considering that Q3 was lower than expected, the revenue of the major language business in 20-22 was lowered from 6/12/18 billion to 6/10/16 billion, net profit from 1.6/3.4/520 million to 1/2.5/4.2 billion; the company's overall revenue in 20-22 was lowered from 22/28/3.4 billion to 21/26/3.2 billion, net profit from 1.5/34/5.2 billion to -0.6/25/4.2 billion, and EPS was adjusted from 0.18/0.39/0.60 yuan to -0.07/0.29 /0.48 yuan. Looking ahead, we judge that the impact of the short-term epidemic will not change the medium- to long-term growth trend. In November, we focused on the renewal of classes after the resumption of classes offline, and store opening is expected to accelerate next year; in the medium term, the company is expected to strengthen both marketing and online segments; in the long run, the company currently has the strongest language teacher resources in the industry and a leading curriculum development system. We expect the company's long-term opening space to be around 1,200 million, and long-term revenue is expected to reach more than 4 billion dollars. The profit is expected to reach more than 1 billion dollars, and maintain a “buy” rating. Risks indicate uncertainty about progress; uncertainty in the divestment of informatization business; lower pace of store opening than expected; franchisee quality control risks; and systemic risks.