The performance is steady, and the education and training sector is growing rapidly.

FY2020 revenue 790 million yuan (+ 5.4%), education and training business income 363 million yuan (+ 16.4%), film and television production and investment income 427 million yuan (- 1.93%); the number of students increased significantly to 17600 (+ 18.5%); the decline in film and television revenue is caused by differences in company investment ratio and TV series themes. Adjusted net profit of 365 million yuan (+ 18.5%) after deducting listing expenses and termination fees and license amortization paid to Communication University Of China.

Completion of conversion and mergers and acquisitions, Construction of Media Art Education ecosystem Company's higher education schools completed the conversion of independent colleges in the first half of the year; at the end of the year, it was announced that it would acquire 100% equity in Shuimuyuan, a leading training leader in the domestic art examination. M & An opens a new business model for the company to further realize the strategy of building the whole ecology of art education. Nanjing Media Institute is a media art college with a leading position in the industry, with sufficient room for expansion; at present, the art training business, from art examination training to media art performance training, will provide an increment for the group's future income; the film and television production group has 22 years of experience and rich copyright reserves, providing industry development opportunities for the company's schools and participating students, and forming a good integration of industry and education.

With all-round development, there is room for growth.

In terms of academic education, the company will continue to expand the scale and capacity of Nanjing Institute of Communication, and actively look for new land and campuses. This year, the number of enrolled students is expected to increase from 6700 to 8000. In terms of extension mergers and acquisitions, the company plans to acquire two media art schools. In the aspect of art training, we will carry out a wide range of quality education and training courses; support the expansion of Shuimuyuan to build a well-known brand of art examination; and constantly seek opportunities to carry out art high school business and other areas of art examination training. Film and television production will continue to attach importance to the quality of works and continue to create high-quality content.

Maintain earnings forecasts and "buy" ratings

We maintain the profit forecast of FY2021-2022, the revenue of FY2021-2023 is 12.66,15.62 and 1.857 billion yuan respectively, and the net profit is 3.87,4.99 and 631 million yuan respectively.

The company's closing price of HK $7.18 on April 9 corresponds to a forecast PE of 25.89,20.10 and 15.89 times for 2021-2023, respectively. We maintain our "buy" rating and raise the company's reasonable valuation range to HK $7.50 to HK $8.32 (previous value: HK $6.72 to HK $7.90).

Risk Tips:

The development of training business is not as expected; the increase in the size and tuition fees of higher education students is not as expected.