FY20 achieved revenue of 1.298 billion yuan, and the company continued to grow steadily: as of December 31, 2020, the company's main business income was 1.298 billion yuan, an increase of 41.5% over the same period last year, of which the company's own K12 school recorded 1.257 billion yuan, an increase of 43.40% over the same period last year, accounting for 96.8% of the total revenue; gross profit was 562 million yuan, up 49.3% from the same period last year; gross profit margin was 43.3% The adjusted net profit was 380 million yuan, an increase of 43.74% over the same period last year; the earnings per share was 18.56 cents; the final dividend was 6.27 Hong Kong cents, and the dividend payout rate for the whole year was about 28.3%. The dividend payment was stable and the performance increased rapidly.

The rapid expansion of the school network has led to a simultaneous increase in the number of students: as of December 31, 2020, the company operated 26 self-owned K12 schools and 6 hosted K12 schools, with a total student population of 57032, an increase of 39.6% over the 40833 in the same period in 2019, of which the number of students in self-owned schools was about 49156, an increase of 34.7% compared with 36480 in the same period in 2019. At present, the company expects to add 9 K12 schools to the national school network in 21 years, namely 7 self-built self-operated schools and 2 self-leased self-operated schools. It has reserved four projects in 22 years and continues to contact with local governments on cooperation in running schools, in order to maintain the company's current rapid development. At present, the company has built a school capacity of 82494 people, with a utilization rate of 69%. If the planned K12 school capacity is added, the total number of students is 167848, and there is still 66% room for development.

The results of its schools are excellent, and high-quality education is replicable: in terms of school performance, the college entrance examination scores of Luzhou, Yibin, Guangyuan and Xichang reached an all-time high this year, with an admission rate of about 87%, 72%, 71%, 69%, 1%, 4%, 6%, 16%, respectively, compared with the previous year. The performance of the new school opened by the company's remote expansion has climbed rapidly, which fully proves the replicability of high-quality education under the rapid expansion of Tianli.

The target price is HK $10.45 and the purchase rating is maintained: the company has successfully confirmed its ability to expand in different places, the teaching results are remarkable, and the undergraduate rate has increased year by year, leading to the rapid development of local education, which has been unanimously welcomed by various local governments, parents and students. we are optimistic about the expansion of Tianli model in the whole country. We value the company based on the DCF model. At present, the company has about 168000 hand degrees. We expect that the number of self-owned students in the company will exceed 200000 in 10 years' time. The average student fee will be 25000 yuan, raising the company's target price to HK $10.45. The projected PE for 2021 gamma in 2022 is 37.0x and 25.4x, respectively, up 20.8% from the recent closing price.