I hope education will enter Century Dingli and start Dingli's second life
Mr. Ye Bin, the company's former controlling shareholder and actual controller, plans to transfer the company's 50 million shares (8.75% of the total) to TWD Mayflower, and entrust voting rights for the remaining 457.44,700 shares (8.00% of the total) shares to TWD Mayflower. At the same time, the listed company issued 171 million shares to Special Drive Mayflower at 527 yuan/share (total share capital of 743 million shares after issuance), raising a total of 900 million yuan. After deducting issuance expenses, all of which were used to supplement the flow. After the above transaction was completed, TWD Mayflower held 221 million shares of the listed company, with a shareholding ratio of 29.76%. Special Drive May Flower became the company's controlling shareholder. He hoped that Education would indirectly hold 100% of TWD Mayflower's shares. Chen Yuxin and Wang Huiwu actually control Hope Education and Century Dingli.
Century Dingli: The core business of communications+education is Dingli University, and the core business is Dingli University. Century Dingli operates both communications and IoT business and vocational education. Among them, the core business of vocational education is Dingli University, that is, hosting and co-building a second-level college. The company's vocational education business is one to provide academic education operation services and education equipment product sales for higher vocational fields in China; the second is to provide education operation services for international academic courses and high-end financial training services.
The communications and IoT business provides professional network testing, optimization, construction, operation and maintenance products, services and comprehensive solutions for communication operators, system equipment vendors, and terminal manufacturers.
Dingli University: An asset-light escrow model, deeply implementing industrial finance and corporate vocational education, strategically focuses on teaching and operation services for vocational education as the main core, weakening the closed, scattered, and highly competitive educational equipment product sales business, and continuously optimizing the personnel structure based on business adjustments.
Currently, the company's vocational education subsidiaries have two brands, “Dingli University” and “Meidu Education”, which provide full-time academic education services for engineering and financial management, respectively. As of now, 20H1 has cooperated with 37 universities in China to successfully establish and operate 19 Dingli Colleges and 18 professional cooperation projects in the field of engineering; in the direction of finance and financial management, it has opened 5 Meidu International Finance Schools, 1 international college with a focus on art and design, with close to 20,000 students.
First coverage, buy-in rating
It is hoped that after education takes ownership, there will be major changes at the company's shareholder level, and it is expected that the fundamentals will gradually be optimized and improved. We expect the company's revenue for 2020-22 to be $1.44 billion, $1.69 billion, and $1.98 billion respectively, of which the education consulting and training business revenue is 160 million, 224 million, and 314 million respectively. Regardless of this change and increase in controlling shareholders, we expect the company's net profit to be 80 million, 100 million, and 130 million, respectively, and PE for 48xpe, 35xpe, and 29xpe respectively.
Currently, the average valuation of A-share education companies in 2020-2021 is about 60xpe and 43xpe, respectively. We gave the Century Dingli sector an average valuation of 40xpe to 45xpe. The corresponding market capitalization range for 2021 is 4.2 billion to 4.8 billion yuan, and the target price is 7.3 yuan/share - 8.4 yuan/share.
Risk warning: risk of market competition, risk of technology and product innovation, risk of impairment of goodwill, risk of accounts receivable, risk of mergers and acquisitions and business integration, risk of the impact of COVID-19, risk of approval of private offerings, etc.
