Overview of events
The company announced that revenue in 2020 is expected to increase 1.04% year-on-year by 6.10% to 20-2.1 billion yuan, with a net loss of 19.80-2.466 billion yuan and a non-loss of 20.11-2.491 billion yuan.
Analysis and judgment:
From a business point of view:
1. Education information projects, century-old talents and Sanlu zero education have suffered large losses due to the epidemic, and the company has set aside 50 million yuan in credit impairment loss and 17-2.1 billion yuan in goodwill impairment provision out of the principle of prudence. According to our analysis, as of 2020Q3 net goodwill book value of 2.861 billion yuan, excluding Chinese in the future is 2.389 billion yuan, it is expected that this impairment will deduct 71% 88% of the net goodwill value of non-large language business. Excluding the impact of impairment, the company is expected to return to the parent net loss of about 0-500 million in 2020.
2. The 20-year revenue of the big language business is + 42% to 623 million yuan, which is in line with expectations, of which the revenue of Q4 in a single quarter increased by 125% to 298 million yuan compared with the same period last year. (1) in terms of enrollment, considering the company's offline resumption of classes only in September, Q4 added 58795 applicants (the average in the first three quarters was 35651 in a single quarter), which was close to the 62061 in 2019H2; 7252 students were enrolled in the six-person-class regular price class on Q4 (6801 in Q3), and a total of 14738 students were enrolled on the last line of Q4 (including six-person small class, Doushen Mingxi class and project class in online school). (2) from the perspective of management reform and the effect of class renewal and payment, 2020Q4 strengthened the KPI assessment and made a cold Spring Festival couplet, which made the winter vacation class continuation report rate reach an all-time high of 84%, and the Q4 collection amount increased by 38% to 165 million yuan compared with the same period last year, reflecting a positive signal.
Investment advice:
It is expected that there will be about 20 direct-run stores for large language business in 2021, including entering 5-6 new cities + encryption + joining buyback, with emphasis on the improvement of store efficiency in Shanghai, Shenzhen and Guangzhou. Online development and marketing investment is expected to increase, we expect online / offline / customized product revenue of about 100 million in 3-6-1, after deducting equity incentive fees, profits are expected to be around 2.2-250 million, and do not rule out the possibility of exceeding expectations. According to our analysis, Q4 has initially shown positive signs of management improvement, and most of the provision of assets outside the language is expected to be light in 20 or 21 years, and the stock price repression factor is expected to be lifted after the fixed increase is on the ground. the acceleration of performance will be more obvious in 22 years. Safety marginal reference 18-year repurchase cost 9.64-10.11 yuan, 19-year major shareholders increase the average price of 9.6 yuan, we believe that the current market value has entered a long-term layout range, 20Q4 renewal rate improvement and payment growth is expected to boost confidence. Taking into account the impairment of non-large language business and the good development of large language, it is estimated that the company's revenue for the year 20-22 will change from 21-26-32 million to 20max 26 / 3.2 billion, the net profit of its home will change from-0.6 billion to-19.8 billion, and EPS will change from-0.07max to 0.290.48 to-2.280.290.49. Long-term optimistic that the company basically occupies the strongest language teacher resources in the industry, as well as the leading curriculum research and development system, we expect the company to have about 1200 stores in the long run, long-term revenue is expected to reach more than 4 billion, and profit is expected to reach more than 1 billion. Maintain a "buy" rating.
Risk hint
Uncertainty of fixed increase progress; uncertainty of information business divestiture; lower-than-expected pace of store opening; franchisee quality control risk; systemic risk