Core view 1) Traditional education informatization business drags down performance losses. In January-September, the company achieved revenue of 1,303 billion yuan, a year-on-year decrease of 1.65%. Net profit loss of 93.5 million yuan, a year-on-year decrease of 257.1%. In July-September, the company achieved operating income of 590 million yuan, an increase of 39.7% over the previous year, and Guimu's net profit of 1.22 million yuan, a year-on-year decrease of 94.03%. The loss in the company's performance was mainly hampered by the traditional education informatization business, which is expected to be gradually divested. 2) The company's major language business is improving. 1. The number of registrations and students increased significantly over the same period last year. From January to September 2020, the number of students enrolled was 225,151, an increase of 74.23% over the previous year. From January to September 2020, the cumulative number of students enrolled in the current term was 211,987, an increase of 124.42% over the previous year; 2. The online business development trend is good. During the reporting period, the company's major language learning business confirmed revenue of 215 million yuan. Branch business, online B2B business, and franchise business accounted for 35.1%/34.3%/27.1%/3.5% respectively. Among them, the company's online six-person class business (ARPU is 11,400 yuan, which is the same as the branch business) is a new business added this year. Currently, the number of current students increased by about 10% the following month, and the company's estimated contribution revenue in 2021 is estimated to reach 150-250 million yuan. 3. Mingxi's big language will contribute to performance. 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. It is expected that 2021 will begin to return to normal and confirm income and attendance. 3) The fixed increase plan is adjusted, and the equity incentive plan is conducive to performance growth. In October, the company's latest fixed growth plan is to increase capital raising to no more than 2 billion yuan, adding the “Small and Medium Institutions Online Education Ecological Service Platform Project” and the “Big Language AI Evaluation System Service Platform Project”. It is estimated that after delivery, the average annual revenue will be 175 million yuan and 374 million yuan respectively; the latest restricted stock incentive plan is conducive to stabilizing the core team, and the assessment target corresponding to the three vesting periods is at least 100%/200%/350% for the Chinese future revenue growth rate in 2021/2022/2023 compared to 2019. 4) Profit forecasts and investment ratings. In 2020-2022, we forecast that the company's EPS will be -0.10 yuan, 0.16 yuan, and 0.24 yuan, respectively, and the corresponding PE in 2021-2022 will be 86.6 times and 60.5 times, respectively. The company continues to consolidate its first-mover competitive advantage in the big language advantage circuit, and may grow into a leading enterprise in subject training in the future. Compared to the future, the company is currently in a period of expansion, and can enjoy a certain valuation premium and maintain a “buy” rating. 5) Risk warning: business development falls short of expectations, market competition, policy risks.