Event: Doushen Education released its 2020Q3 financial report. The company achieved revenue of 590 million yuan, yoy +39.74%, net profit of 1.22 million yuan, and yoy -94%. Among them, major language services achieved revenue of 143 million yuan in 20Q3. The core view is that in addition to Beijing, offline outlets will resume classes, driving a recovery in branch business. The 20Q3 branch business achieved revenue of 75.53 million yuan, and Q1/Q2 was 39.86/52.64 million yuan respectively, a significant improvement over the previous month. The number of students enrolled in the offline summer season reached 3.3 w. Among them, training classes accounted for a relatively small proportion, mainly Wang Zhe Top Class. Due to the impact of the Beijing epidemic, some students in Wang Zhe Class were enrolled in the online six-person class. Overall, the number of students in the two core classes in the offline King's Top Class is basically stable. With the transformation of Peiyou's summer vacation and Beijing's offline response, branch business will continue to pick up in Q4. Doushen Online School is branded, and multiple product lines for online business are gaining strength. The number of online core products reached 2.33w, and the annualized ARPU value exceeded 5000. Among them, there were 6,801 students in the online six-person class (Wangzhe/Pei You/Top), 2,951 in the online celebrity class (customer unit price: 4000-8500), and 13,569 students in the online live streaming course (other types of short-term courses). Additionally, the 99 yuan online summer training course reached 3.8w. The expansion of online recruitment has been impressive. The online six-person small class has effectively achieved the retention of students from the Beijing region. At the same time, products have been promoted throughout the country, and the online product system has been refined and gradually matured. Product lines such as celebrity courses and short-term live streaming courses use various Internet channels to reach 1706w of users, and the traffic pool transformation is beginning to bear fruit. The company expects the revenue of the online six-person class to reach 150 to 250 million yuan, which will become an important revenue growth point for the company next year. The franchise business improved month-on-month, and B2B business revenue was stable. The 20Q1/Q2/Q3 franchise revenue was 1206w/506w/747w, respectively. The company liberalized participation in specific regions of Beijing and Shanghai, and is expected to gradually realize revenue in Q4. The B2B business achieved revenue of 2121 million yuan, and revenue remained relatively stable. We expect the two businesses to contribute more than 100 million yuan in revenue in FY20, which will be a strong support for the company's revenue growth this year. The big language circuit can be expected to grow over a long period of time. The company's teachers and products are highly competitive in the industry, and fixed growth plans and equity incentive plans are progressing steadily. After the challenges of the pandemic, the team has maintained strong execution and cohesion, offline and online brands have been unified and gradually implemented, and long-term investment value is prominent, and we are optimistic about the company's long-term development. Financial forecasts and investment recommendations The company's business is in line with our recovery expectations. Online and offline revenue will gradually recover in FY21. We are optimistic about the company's later growth. The revenue for the period 2020-2022E is 12.9/20.2/3.16 billion yuan, and the net profit attributable to the parent company is -3.51/0.15/398 million yuan. The performance in 2020 was distorted due to the pandemic. The education and training business used the 21-year average PE46.5X of comparable companies, with a corresponding market value of 14.9 billion yuan; the other businesses were 1.7 billion yuan in net assets, with a total market value of 16.6 billion yuan, corresponding to a stock price of 19.08 yuan/share, maintaining a “buy” rating. Risk suggests that the conversion of the fall training program falls short of expectations, and the risk of impairment of goodwill