Earnings: 16-year results were dragged down by 460 million yuan in goodwill impairment, improved in the first quarter of 17 compared with the same period last year

In 16 years, the company's operating income was 840 million yuan, down 0.8% from the same period last year, and its net profit was-430 million yuan (21 million in 15 years). The loss was mainly due to an impairment of 460 million yuan in goodwill generated by the acquisition of 2 billion yuan of Longwen education. In the first quarter of 17 years, the performance improved year on year, with operating income of 310 million yuan, an increase of 14.8% over the same period last year, and net profit of 43.877 million yuan, an increase of 38.35% over the same period last year. The company expects to achieve a net profit of 7000-90 million yuan in the first half of 17 years, an increase of 88.9% 142.9% over the same period last year.

Sub-business: semiconductor lighting revenue decreased by 8.3%, Longwen contributed 1761 net profit in December.

Education and training: in December of 16 years, Longwen Education was presented, and the revenue was 60.523 million yuan, the gross profit was 26.942 million yuan, the gross profit was 44.5%, the contribution revenue accounted for 7.18%, and the net profit was 17.61 million yuan. Among them, Longwen Education 16 realized deduction of non-net profit of 66.425 million yuan for the whole year.

Semiconductor business: (1) Outdoor lighting: realized operating income of 340 million yuan, a year-on-year decrease of 13.3%, gross profit margin of 31.7%, annual contribution revenue accounted for 40.0%, contribution gross profit accounted for 39.0%. (2) Landscape products: realized operating income of 110 million yuan, a decrease of 40.0% over the same period last year, gross profit margin of 33.5%, accounting for 14.1% of gross profit. (3) display screen and others: realized operating income of 200 million yuan, an increase of 74.2% over the same period last year, realized gross profit of 33.2%, and contributed gross profit accounted for 24.8%.

The focus of the future: the rapid expansion of educational territory, resource integration is expected to help improve performance.

K12 extracurricular tutoring: Longwen Education is the national leader of K12, mainly engaged in 1-to-1 tutoring in primary and secondary schools. It has more than 400 outlets in more than 20 cities across the country, deducting non-net profits of 66.425 million yuan in 16 years and promising to deduct non-net profits of not less than 563.8 million yuan after taxes in 15-18 years. Concave-convex education is mainly engaged in personalized tutoring, focusing on the development and joining. At present, it has 695 branches in 31 provinces and cities across the country, relying on the light asset management output mode to achieve rapid replication. Siqi Education, which focuses on small class teaching, currently has 67 campuses in Hunan and trains more than 150000 students a year.

Private schools: Chengdu Seventh Middle School Experimental School is a full-time high-end boarding school run by the people. the annual cost per student of primary school, junior high school, senior high school and international department is 42000 yuan, 38200 yuan, 45200 yuan and 96000 yuan, respectively. The number of people is about 2500, 2200, 1050, 120, with a total annual income of about 248 million.

Early childhood education: little Red Riding Hood Education is a chain of kindergartens, with 75 directly operated schools and 33 franchised schools. No less than 60 kindergartens are planned to be built or purchased in 17-19, which is expected to contribute considerable profit increment.

Vocational education: British education is a vocational training institution, mainly engaged in vocational qualification certification, adult academic education and so on. It is promised that the non-net profit deducted from 17-19 years will not be less than 13 million yuan, 16.9 million yuan and 21.97 million yuan respectively.

International Education: Eddie Education is an international education group, which has seven schools and eight faculties. At present, the underlying assets have a VIE structure and can not be listed as listed companies. Shenzhen International Preparatory Academy is one of the only three international preparatory colleges in China. It plans to enroll 98 people in 17 years at a fee of 163,000 yuan per person / year.

It is expected to build a comprehensive education group in the long run, and its performance can be improved. It will be given a rating of "prudent overweight".

In December 16, the company also expressed Longwen Education, and reported revenue and net profit of 60.523 million yuan and 17.61 million yuan respectively. At present, the company has initially realized the diversified layout in the fields of preschool education, K12 extracurricular tutoring, private schools, vocational education and international education, and is expected to rapidly grow into a comprehensive education group. Longwen Education promises that the accumulated non-net profit after tax will not be less than 563.8 million yuan in 15-18 years, Little Red Riding Hood promises that the CAGR in 17-19 years will not be less than 15%, and that Britain, Eddie, Convex, Siqi and Chengdu will gradually contribute profits in 17-18 years, which is expected to help the company improve its performance. It is estimated that the company's EPS in 17-19 is 0.08,0.12 and 0.16 yuan respectively, the company's medium-and long-term performance growth is worth looking forward to, and the company is given a "cautious overweight" rating.

Risk hints: high short-term valuation; impairment risk of goodwill; rising costs caused by extension expansion.