[investment points]
On October 30, 2020, the company released three quarterly reports. In the first three quarters of 2020, revenue reached 1.3 billion yuan, down 1.7% from the same period last year; net profit from home was-93.499 million yuan, down 257.1% from the same period last year; and non-net profit was-110 million yuan, down 288.1% from the same period last year.
The company achieved revenue of 590 million yuan in the third quarter, up 39.7% from the same period last year and 1.5% from the previous quarter. The net profit of returning to the mother in a single quarter was 1.216 million yuan, down 94% from the same period last year and 97.3% from the previous quarter.
The epidemic led to the postponement of the registration peak and the rapid increase in the number of students studying at the "Air Branch". In the third quarter of 2020, the company received 95.7 million yuan in cash and 140 million yuan in recognized income. In the first three quarters, the company received a total of 292 million yuan in cash and 325 million yuan in recognized income. Affected by the epidemic, the peak period of students' registration in the first half of the big language business was postponed from April-June to July-September. With the weakening of the impact of the epidemic, the number of students enrolled in autumn across the country has exceeded that of the same period last year. According to the data released in the three quarterly reports, the number of students who signed up in the third quarter was about 109000, up 77.96% from the same period last year. The total number of students who signed up in the first three quarters was 225000, up 74.23% from the same period last year. The total number of students enrolled in the third quarter was 95000, an increase of 121.79% over the same period last year; the total number of students in the first three quarters was 212000, an increase of 124.42% over the same period last year.
In terms of online business, Doushen online School enrolled 61000 students in the third quarter of 2020, and six online classes were added to the "Air Campus". At present, the monthly increase in the number of students is about 10%. It is expected that by next autumn, the number of students will be the same as that of the Beijing campus, reaching the sum of all the campuses outside Beijing. The contribution income of "Air Campus" in 2021 is expected to be about 150-250 million yuan.
The fixed growth program and equity incentive projects have been promoted steadily to create an educational ecosystem with the big language as the core. Continue to lay out the "big language" business and promote the team's "preliminary Plan for issuing shares to specific targets (the second revision)" issued on October 23. This additional project company intends to raise no more than 2 billion yuan from no more than 35 specific objects by way of inquiry. The main purpose is to develop the "big language" business and improve the ecological capacity of B-end and C-end, and increase online and offline drainage. The funds raised are mainly used to upgrade teaching contents and teaching methods, online education ecological service platform projects for small and medium-sized institutions, large language AI evaluation system service platform projects and supplement the company's liquidity. In addition, the company issued a draft equity incentive plan to grant 18.75 million shares to 70 senior executives and core personnel, accounting for about 2.16% of the total share capital. The performance evaluation target for the award of restricted shares is to take 2021 9 as the base, and the growth of Chinese future business income from 2019 to 2023 is not less than 100%, 200%, 350%, respectively.
[investment advice]
The company has been deeply engaged in large language business for many years, and its brand effect and content advantages are obvious. with the gradual weakening of the impact of the epidemic, the company's offline business has gradually recovered. at the same time, the company has increased its layout of online business and enhanced its online and offline drainage ability. the growth rate of the number of people reading is bright, and it is expected to continue to consolidate the first-mover advantage of the big language track in the future.
The company is expected to have an operating income of 21.0, 2.48, and a net profit of 0.39, 308, and 0.22 million, respectively, with an EPS of 0.04, 0.36, and 0.60 yuan, respectively, in 2022. The company will be given an "over-holding" rating corresponding to PE, which is twice as much as 315-39-23.
[risk Tip]
Recurrent risk of epidemic situation
Risk of policy supervision in education industry
Competition among the same industry intensifies
The progress of the fixed increase project is not as expected.
The enrollment is not as good as expected.