The company disclosed its mid-year report in 2020: revenue decreased by 5.47% to 979 million yuan, net profit from return to mother decreased by 3.57% to 133 million yuan, and non-net profit from return to mother decreased by 4.23% to 119 million yuan. In Q2 in 2020, the revenue increased by 9.67% to 734 million yuan, and the net profit returned to the mother increased by 21.51% to 153 million yuan.
The decline of the book business has slowed down, and the periodical business has increased significantly. In the first half of 2020: (1) the revenue of the book business reached 379 million yuan, down 11.37% from the same period last year, mainly because the epidemic affected the school year and book sales; of which Q2 achieved revenue of 272 million yuan, down 2.72% from the same period last year. (2) the revenue of the periodical business reached 72 million yuan, a substantial increase of 89.97% over the same period last year, which is expected to be due to the acquisition of the French publishing house EDP Sciences; in November 2019, in which the periodical circulation dropped from 638800 copies of 2019H1 to 614000 copies of 2020H1, and the confirmed service revenue increased from 21 million yuan of 2019H1 to 38 million yuan of 2020H1. (3) the revenue of import and export business reached 509 million yuan, down 8.14% from the same period last year.
The core competition barrier is the leading academic influence. A total of 10 periodicals have been selected into the SCI, and 7 periodicals have been listed in the Q1 area of international journals of the same discipline. The SCI influencing factors of domestic journals have been continuously improved. Among them, the influence factor of National Science Review increased from 13.222 in 2018 to 16.693 in 2019, which is second only to Nature and Science in the ranking of international multidisciplinary journals. The impact factor of Science Bulletin increased from 6.277 in 2018 to 9.511 in 2019, ranking seventh among comprehensive academic journals in the world.
Investment advice. We estimate that the return net profit of the company from 2020 to 2022 will be 4.980.71 / 626 million yuan, the corresponding EPS will be 0.63 X/14.49X/13.22 0.79 yuan, and the PE corresponding to the closing price on August 31, 2020 will be 16.63 yuan X. We maintain a 20 times PE valuation in 2020, corresponding to the company's fair value of 12.59 yuan per share, and maintain a "buy" rating.
Risk tips. The impact of COVID-19 's epidemic situation; the promotion of digital projects is not as expected; the risk of cooperation among overseas institutions; and the intensification of competition in the primary and secondary school teaching