The company's performance in 2021 fluctuated greatly under the disposal of goodwill impairment-subsidiaries, in which the revenue of early education business was + 31% compared with the same period last year, showing a good recovery trend. Although the performance of 1Q22 fluctuates under the influence of the local epidemic, and the fermentation of the epidemic in some subsequent areas may still have an impact, the company has gradually clarified its long-term development direction. With its leading competitiveness and sufficient cash flow, we are optimistic that the company will tide over the difficulties and usher in a rebound in performance after the epidemic has been brought under control. Maintain the "overweight" rating.
Under the influence of the epidemic, Tianjin Mejem set aside a large amount of goodwill impairment, resulting in the company's paper loss. 1) income and profit: in 2021, the company's revenue is 336 million yuan /-5.61%, and the net profit is-198 million yuan. The investment loss caused by the disposal of the subsidiary Kai de Education was 47 million yuan, at the same time, because the performance of Meijem in Tianjin was lower than expected, the impairment of goodwill was 753 million yuan (the residual value of goodwill was 651 million yuan). And the fair value change income brought by performance compensation is 649 million yuan. Excluding performance compensation, investment losses and impairment of goodwill, the company's operating profit is 95 million yuan. The company recognized 189 million yuan in income tax expenses in 2021 (mainly due to the increase in deferred income tax expenses). 2) costs and expenses: the company's gross profit margin increased to 64.6% in 2021, mainly due to the divestiture of the machinery manufacturing business with low gross profit margin. The sales / management / R & D expense rate was 8.9%, 23.5%, and 0%, a year-on-year decline of 0.1/5.7/4pcts, mainly due to the sale of 100% equity of subsidiary third Base Technology, the related sales and management expenses were reduced, and the R & D expenses were returned to zero. 3) Cash: the net cash flow generated by the company's operating activities in 2021 is 38 million yuan / + 153.17%.
By the end of 2021, the company has 400 million yuan in monetary funds, 650 million yuan in transactional financial assets, 2.2 million yuan in short-term loans and 280 million yuan in long-term loans.
Divest the overseas study section and focus on early education business. 1) selling Kaide Education: the company's language training and service business for young people studying abroad with "Kaide Education" as the main body achieved an income of 0.24 billion yuan /-49.1% in 2021. In order to optimize the industrial structure, the company sold 100% equity in Kaide Education for 15 million yuan. Divest the language training and service business for young people studying abroad. 2) focus on the main business of early education: the revenue of the company's early education business in 2021 is 312 million / + 30.75%, and the gross profit margin is 68.5%/+0.8pcts. It has recovered somewhat after the epidemic, but education income is still down 24% compared with the early 2019, and gross profit margin is down 9.3pcts. By the end of 2021, the company had 562 stores / + 7, including 548 / + 3 for Mei Jim and 14 / + 4 for Little Jim. The main business of early education will continue to develop in the future: 1) Curriculum optimization and updating: optimize the three core courses of physical education, music appreciation and experience, art appreciation and practice, and launch "Mei Jim online" WeChat Mini Programs and mobile client. enrich online courses 2) strengthen brand promotion: spread the concept of brand, dynamics and scientific early education through the official website of the brand and new media channels such as Wechat official account, Douyin, Sina Weibo Corp, Video account and Xiaohongshu. The daily average of the company's Wechat index in 2021 is more than 90% higher than that of the previous year. 3) implement fine management to improve efficiency: the company introduces the data analysis management model on the basis of the original management system, improves the operation efficiency under the guidance of data analysis, optimizes the organizational structure according to the needs of business development, and integrates the original departments. to provide support and guarantee for the company's business development and industrial development.
The performance of 1Q22 fluctuated and the pace of recovery slowed down by the epidemic. 1Q22 achieved an income of 44.69 million yuan /-44.21%, with a net profit of-11.68 million yuan, mainly due to repeated epidemics in some parts of the country, resulting in the periodic suspension of offline teaching in Mei Jim's early education stores. The company's 1Q22 gross profit margin is 58.7%/-9.2pcts. The sales / management / financial expense rate is 9.4%, 41.1%, 12%, compared with the same period last year + 1.6/+15.8/+4.5pcts. The net cash flow generated by operating activities is-2783 yuan / + 5.4%. The overall operation is under pressure, and the 2Q22 pressure is expected to remain.
In the long run, relying on high-quality products, the company still has a leading position in the field of early education in China, and the current cash flow is sufficient, and the performance is expected to rebound after the epidemic is gradually controlled.
Risk factors: offline business recovery is not as expected, joining model management risk, industry policy change and other risks.
Investment suggestion: taking into account the divestiture of the company's overseas study business and the repeated influence of the epidemic situation in some areas, the company's EPS forecast for 2022-23 is reduced to 0.04max 0.09 yuan (the original forecast is 0.22max 0.27 yuan), and the EPS forecast for 2024 is increased by 0.12 yuan. Combined with the company's historical valuation center (51 times PE), the company is given 50 times PE in 2023, corresponding to the target price of 4.50 yuan, maintaining the "overweight" rating.