The company will open a store in 2020 against the trend. With the gradual recovery of terminal demand, the company's performance is expected to pick up. Tianjin Meijem, a holding subsidiary, has promised that the actual net profit in 2021 will not be less than 301 million yuan, demonstrating the company's confidence.
Taking into account the impact of repeated 2021Q1 epidemic in local areas and the dilution of the increase in equity, the company's EPS forecast for 2021-22 is reduced to 0.22 EPS 0.27 yuan (the original forecast is 0.32 shock 0.40 yuan), and the EPS forecast for 2023 is increased to 0.31 yuan. Combined with the company's historical valuation center, the company is given 26 times PE in 2022, corresponding to the target price of 7.00 yuan, maintaining the "overweight" rating.
The performance in 2020 will be greatly affected by the epidemic. 1) Revenue and profit: in 2020, the company's revenue was 356 million yuan (- 43.4%), of which industry / early education / study abroad business accounted for 20%, 67%, 13%, respectively, and the net profit returned to the mother was-527 million yuan. 2) profitability: the gross profit margin decreased from 12.9pcts to 56.1%, of which the gross profit margin of industrial / early education / study abroad business was 24.12%, 67.66% and 45.52%, respectively, and decreased by 21.34/10.06/19.08pcts respectively. The sales expense rate is 9.05% (+ 1.88pcts) and the administrative expense rate is 29.18% (+ 7.79pcts). The increase in expense rate is mainly due to the relative rigidity of the salary of employees and the rent of office space. Under the influence of the epidemic, the performance of its holding subsidiary Tianjin Meijim and Kai de Education fluctuated, so the company set aside 629 million yuan in goodwill impairment.
Stripping off the industrial sector, Mei Jim set up shop against the trend. 1) in 2020, Tianjin Meijem's income was 235 million yuan /-42.8%, the net profit was 9694 yuan /-59.3%, and the net profit margin was 41.2%, a decline in 16.7pcts. At the end of 2020, the number of signing centers of Mei Jim in the mainland reached 555 (an increase of 40 compared with the end of 1919), which was still growing against the trend under the influence of the epidemic. At the same time, the company launched the sub-brand "Little Jim" layout below the third-tier cities, providing localized early education courses, the country has signed a contract of 10 centers. In terms of channels, the company has expanded online courses, with more than one million online users in 2020, and 80% of them are newly registered users. 2) the income of Kai de Education in 2020 is 46.35 million yuan (- 44.8%), the net profit is 8.28 million yuan (- 72.9%), and the net profit margin is 17.9%/-18.5pcts. The company takes the initiative to adjust its business strategy and develop low-age original courses to meet the needs of more users when the epidemic affects overseas study. 3) the company sold its subsidiary Dalian third Base Technology (industrial subsidiary) at a price of RMB 249 million in August 2020, so as to focus on the main business of education and enhance the overall profitability of the company.
1Q21 is gradually recovering, and Meijim's performance commitment is 301 million yuan in 2021. 1Q21 achieved an income of 8009 million yuan / + 39% and a net profit of 7.59 million yuan / reversal of losses. Due to the recurrence of the epidemic in some areas (such as Beijing, etc.) in the first quarter, the performance has not yet returned to the 1Q19 level. The company expects 1H21 profits of 24 million to 30 million yuan / + 205% to 230%, down 30% to 12% compared with 1H19. In addition, due to the impact of the epidemic in 2020, Tianjin Meijem Company failed to achieve the original 2020 performance commitment of 290 million yuan, with the consent of all parties, re-signed the agreement, Tianjin Meijem promised that the actual net profit in 2021 would not be less than 301 million yuan.
Risk factors: offline business recovery is not as expected, overseas study business demand fluctuations, industry policy changes and other risks.
Investment suggestion: the company will open a store in 2020 against the trend. With the gradual recovery of terminal demand, the company's performance is expected to pick up. Tianjin Meijem, a holding subsidiary, has promised that the actual net profit in 2021 will not be less than 301 million yuan, demonstrating the company's confidence. Taking into account the impact of repeated 2021Q1 epidemic in local areas and the dilution of the increase in equity, the company's EPS forecast for 2021-22 is reduced to 0.22 EPS 0.27 yuan (the original forecast is 0.32 shock 0.40 yuan), and the EPS forecast for 2023 is increased to 0.31 yuan. Combined with the company's historical valuation center, the company is given 26 times PE in 2022, corresponding to the target price of 7.00 yuan, maintaining the "overweight" rating.