Events:
In 2020, the company achieved an income of 849 million yuan, a decrease of 11.5%, a net profit of 114 million yuan, an increase of 42.0%, and a net profit of 113 million yuan, an increase of 46.7%. The income per share was 0.41 yuan per share, an increase of 24.2%.
2021Q1, realized income of 213 million yuan, an increase of 24.9%, a net profit of 31.84 million yuan, an increase of 46.8%, and a net profit of 31.51 million yuan, an increase of 47.7%.
Comments:
The performance of Longmen education is affected by the epidemic situation and the change of enrollment policy, and a small amount of goodwill impairment is included. In 2020, Longmen's education income was 493 million yuan, down 10.6%, the net profit returned to the mother was 163 million yuan, down 1.1%, and the gross profit margin increased by 2.16pct to 58.35%. From the perspective of the split business, the tuition income of the fully closed high school and college entrance examination was 334 million yuan, an increase of 2.2%, and the gross profit margin was also increased by 7.73pct to 62.30%. By the end of the 20th year, there were 6 campuses in Xi'an, with 9347 students enrolled in the closed education business in autumn and 11417 people in other closed tutoring and training. K12's extracurricular training income was 151 million yuan, with a decrease of 12.6%, and its gross profit margin was also reduced by 0.53pct to 47.88%. By the end of the 20th year, it had 39 teaching outlets in 12 cities. Taking into account the low performance expectations, Longmen set aside 36.15 million yuan of goodwill impairment.
Promote the divestiture of the ink business and focus on the education industry. In 2020, the income of printing ink was 355 million yuan, a decrease of 12. 5%.
7%, the gross profit margin is also reduced by 0.32pct to 21.77%. The company plans to integrate and transfer all assets, claims, debts and resources related to the ink manufacturing business to a wholly-owned subsidiary to prepare for the subsequent divestiture. At present, the transfer of ink assets is in normal progress. The divestiture of the ink business will help the company focus on the education industry.
During this period, the expense rate is well controlled. In 2020, the sales expense rate decreased from 0.73pct to 7.8%, the management expense rate decreased from 2.48pct to 5.9%, the financial expense rate decreased from 0.25pct to 2.07%, and the R & D expense rate increased from 0.23% to 1.76% for the upgrading and R & D of intelligent teaching products.
21Q1 Ganmen 100% combined table brings performance growth. Longmen Education merged 100% from April 2020, compared with 49.76% before, which led to a significant increase in the company's 2021Q1 performance. 2021Q1, the rate of sales expenses increased to 9.54%, the rate of management expenses increased to 6.93%, and the rate of R & D expenses decreased to 2.17% 0.67pct.
The extension is carried out step by step, and the speed is increased by copying in different places. Starting from October 20, the company announced one after another that it planned to acquire schools in Changsha, Hefei, Henan and Tianjin, among which Henan schools completed the registration of industrial and commercial changes, and planned to cooperate with Huiwen Shaolin to speed up the process of remote replication. Longmen is good at cultural courses and college entrance examination tutoring into these schools, mergers and acquisitions also effectively shorten the training period.
Investment advice: Longmen's performance in 20 years is low due to the impact of the epidemic and enrollment policy. With the improvement of enrollment after the end of the epidemic and the acceleration of the remote replication process, the company's performance is expected to grow steadily. Assuming the divestiture of the ink business, the annual net profit forecast for 2021-22-23 is 1.94 billion to 2.36 billion, corresponding to the valuation of 20x/17x/14x, and maintaining a "buy" rating.
Risk hint: the policy risk of the education industry, the performance is not up to expectations because the enrollment is not up to expectations.