occurrences
The company released its 2019 annual report and 2020 quarterly report: 1) 2019 achieved revenue of 1,248 million yuan, a decrease of 24.97%; net profit of the mother was 119 million yuan, a decrease of 78.01%; net profit of the non-return mother was 142 million yuan, an increase of 4.78%; net operating cash flow was 140 million yuan, which changed from negative to positive; EPS (basic) 0.27 yuan/share, down 78.01%; ROE (weighted) 3.91%, down 15.5 percentage points from the previous year. 2) The company's revenue in the first quarter of 2020 was 84.916 million yuan, a decrease of 69.39%; net profit of the mother was 176.0.2 million yuan, which changed from negative to positive; net profit of the non-return mother was 5.668 million yuan; ROE (weighted) 0.58%, up 0.62 percentage points from the previous year; EPS (basic) 0.04 yuan/share, changed from negative to positive.
Brief review
In 2019, Oveia's revenue grew steadily, and after deducting performance, there was a slight increase. As the company's core assets, Oveia's revenue in 2019 was 477 million yuan, an increase of 14.96%; after deducting non-net profit of 198 million yuan, an increase of 0.47%, accounting for 139.3% of the company's deducted non-net profit; the gross margin of the company's education informatization recording and broadcasting products reached 76.69%, a slight decrease of 0.4 percentage points from the previous year; Ovia deducted non-net interest rate of 41.48%, down 5.98 percentage points from the previous year.
Due to the impact of the COVID-19 pandemic, campus informatization procurement slowed down in the first quarter. After the COVID-19 outbreak, Oveia provided free services such as live streaming support, online teaching and research, and conference webcast to district education bureaus and teachers and students on January 29, 2020. As of April 21, its live streaming platform covered more than 360 districts and counties in 31 provinces (including Hong Kong) across the country, providing 52,000 live streaming services to tens of millions of teachers and students, greatly increasing the popularity of its products.
After the COVID-19 pandemic, the penetration of video recording and live streaming products is expected to accelerate. In 2018, the market size of China's recording and broadcasting industry was 36 billion yuan, of which the consumption of education recording and broadcasting systems accounted for 59.9%, and the market size reached 21.6 billion yuan. Under the COVID-19 pandemic, school classes have switched to online, and the importance of aerial classrooms and live recording and broadcasting equipment on campus has been highlighted. It is expected that the pandemic will accelerate the development of the education recording, broadcasting, and live streaming industry.
Divest chemical assets and increase education business. In 2019, the company initiated the transfer of 100% of the shares of Changshu New Materials and 100% of the shares of New Materials Sales. In March 2020, the two companies completed the registration of industrial and commercial changes, and the asset transfer was completed. In 1Q20, Oveia signed a total of 187 sales contracts, with a total amount of RMB 21.54 million. With the divestment of the chemical business, the company will focus on the education business, and the scale of Oveia's business is expected to grow further. In January 2020, the company signed a 158 million yuan contract with China Mobile Construction to provide education system integration services for Henan Province.
Profit forecast: The company's revenue for 2020 and 2021 is estimated to be 995 million and 780 million yuan respectively, down 20.3% and 21.6%; net profit after deducting non-return to the mother is 216 million and 262 million yuan respectively, up 52.1% and 21.1%; maintaining the “increase in holdings” rating.
Risk warning: Competition in the recording and broadcasting industry is intensifying, and the progress of education informatization construction falls short of expectations.