Event
On October 31, the company issued its 2020 quarterly report and acquisition announcement: 1) the company's revenue in the third quarter was 219 million yuan, down 31.1%; the net profit returned to its mother was 51.912 million yuan, an increase of 78.2%. In the first three quarters of 2020, the company's ROE (weighted) 2.80%, up 2.38% over the same period last year; EPS (basic) 0.19 yuan per share, up 582.97%. 2) the company intends to acquire 27% equity of Huasheng Jingshi at a cash consideration of 292 million yuan.
Brief comment
Ovia's orders picked up in the third quarter, and the business situation improved significantly. Ovia, a wholly owned subsidiary of 20Q3, realized revenue of 131 million yuan, an increase of 24.1%, and a net profit of 59.583 million yuan, an increase of 24.8%. By contrast, 2020H1 Ovia's revenue was 87.555 million yuan, down 14.3%, and its net profit was 24.103 million yuan. 20Q3 Ovia signed a total of 1076 contracts with a total amount of 155 million yuan, compared with 187,530 contracts signed by 20Q1 and 20Q2 Ovia, with a total amount of 0.22 yuan and 85 million yuan respectively. With the domestic epidemic under control, the procurement demand for educational information products such as live broadcasting and recording has been released, and the demand for Ovia products has continued to grow.
Continue to divest chemical assets and focus on education business. The company's revenue fell by 31.1% in the third quarter, mainly due to the purchase of two chemical assets in Changshu new materials and new materials sales. In October 2020, the company plans to transfer 65% of the shares of Zhenfu new materials by way of public listing, with a base price of 198 million yuan. If Zhenfu new materials are purchased, the company will completely divest the chemical assets and further focus on the education business.
The acquisition of Huasheng Jingshi, cut into the new track of industry-education integration vocational education. Huasheng Jingshi is an educational technology company that provides industry-education integration solutions for universities and higher vocational colleges, and its business includes two aspects: 1) practical training products mainly cover ICT and intelligent manufacturing majors. Huasheng Jingshi provides students with industry practice and theory teaching by building a real practical training environment in the industry, supplemented by teaching materials, teaching videos, engineering cases and other teaching resources. 2) the teaching and training service is mainly to provide professional course teaching assistance for higher vocational colleges, and the Hua Sheng Jingshi team undertakes the course teaching, curriculum practice and other work. In 2019, the revenue of Huasheng Jingshi was 354 million yuan and the net profit was 43.9675 million yuan. The transferor promised that the net profit of Huasheng Jingshi in 2020, 2020-2021 and 2020-2022 would not be less than 0.7,1.6 and 270 million yuan respectively. After the completion of this acquisition, the company's education business will expand from education informatization to vocational education, which is expected to further enhance the growth space of the company's education business.
Profit forecast: the company's revenue in 2020-22 is expected to be 6.19,5.13 and 616 million yuan respectively, with year-on-year changes of-50.4%,-17.0% and 20.0% respectively, and non-return net profit of 1.20,2.09 and 264 million yuan respectively, year-on-year changes of-15.5%, 74.0% and 26.4% respectively.
Risk hint: the competition in the recording and broadcasting industry is intensified, and the progress of educational informatization construction is not as expected.