Events:
The company announced on May 24, 2017 that it would terminate the major asset restructuring of Chuangxian Science and Education and Jin Shangqi, and announced on May 25, 2017 that it planned to use self-raised funds to acquire a 51% stake in Beijing Daigo Brothers Technology Development Co., Ltd. the transaction amount is 229.5 million yuan.
Viewpoint:
The main ceramic industry is sound, and production capacity expansion helps to improve the performance of the main industry. In 2016, the company realized operating income of 351.3595 million yuan, an increase of 20.79% over the same period last year, and the net profit belonging to the shareholders of the parent company was 39.1089 million yuan, an increase of 6.02% over the same period last year. In order to promote the development of the company's main business, the company in 2016: 1) strengthen the promotion of the domestic market of fine porcelain and build a daily experience hall of fine ceramics; 2) actively make use of "Internet +" to set up official flagship stores on the mainstream e-commerce platform, combined with online and offline experience activities, broaden new channels to enhance product penetration 3) while optimizing the product structure, the company's main ceramic industry has expanded its production capacity by acquiring 80% of Chaozhou Lianjun Ceramic Co., Ltd. and raising investment in household porcelain production lines, including bone porcelain. The company raised investment to build 6 million pieces of bone porcelain production workshop and 17 million pieces of daily porcelain production workshop, which will innovate the production process and increase the added value of products while expanding production capacity to optimize the product structure and ensure the steady growth of the company's main business.
The enlightened master shows his determination to put an end to the major asset reorganization of the target of educational informatization. The company's Guangdong Songfa Chuangwin Industrial Fund received a 10.13% equity stake in Master Education with its own capital of 81016200 yuan on March 20, 2017. At present, it holds a total of 13.98% of the equity of enlightened master education.
Enlightened master education has strong profitability and excellent growth. The company has been deeply engaged in the education industry for more than ten years, and the brand advantage in South China is highlighted. Guangzhou ranks second, with a market share of about 16%. As of July 2016, there were 70 teaching sites with 20356 students. In the first half of 2016, the company achieved an operating income of 136.9685 million yuan, an increase of 24.77% over the same period last year, and a net profit of 9.5568 million yuan, an increase of 95.50% over the same period last year. The increase in capital for enlightened master education is expected to expand the business layout in the field of extracurricular tutoring in K12 in the future. the increase marks the basic establishment of the company's new profit growth point.
At the same time, in 2017, the company plans to acquire new third board company Chuangxian Science and Education and Jin Shangqi. Chuangxian Science and Education is a comprehensive education company of "software + hardware + service" with the combination of industry, learning and research. mainly engaged in preschool education, K12 education and vocational education smart education cloud platform, intelligent teaching terminals and intelligent education value-added service products R & D, production, sales and operation. Jin Shangqi is also a comprehensive solution provider of educational informatization that insists on the integration of science and education. Due to major changes in the securities market during the suspension period, the two sides failed to reach an agreement on the terms of the transaction, and finally terminated this major asset restructuring. We believe that the company's determination to transform education has been firm, and the termination of the reorganization of the target of education informatization in the current market environment shows the company's consideration of the long-term strategic layout of the education industry.
Adhere to the "ceramic manufacturing + education industry" two-wheel drive, the acquisition of Daigo brothers cut into online live education. The company has firmly established the strategic development goal of two-wheel drive of "ceramic manufacturing + education industry". After two setbacks in restructuring, the company has once again attacked the online live education market with broad prospects. The company announced on May 25, 2017 that it plans to acquire a 51% stake in Beijing Daigo Brothers Technology Development Co., Ltd with self-raised funds of 229.5 million yuan. Daigo brothers is an Internet education live cloud and virtual education network operator, mainly provides online education live broadcast technical services and audio and video interactive live broadcast services for online education institutions, the main customers include children's English online education enterprise VIPKID, college student examination online training enterprise test worm network, online civil service training institution cashew public test and other emerging online education institutions. Among them, VIPKID, as a giant in the online education segment, has completed round C financing of US $100 million, and currently has more than 800000 students and more than 10000 registered North American foreign teachers. After the acquisition of Daigo Brothers, Songfa shares will officially cut into the blue ocean market of live education, bringing new profit growth points for the company.
The operating income and net profit of Daigo Brothers in 2016 were 24.3589 million yuan and 687500 yuan respectively, and the revenue and net profit from January to March 2017 were 9.3578 million yuan and 3.8005 million yuan respectively. Daigo Brothers promised that the net profit from 2017 to 2020 would be no less than 25 million yuan, 32.5 million yuan, 42.25 million yuan and 52.25 million yuan respectively.
Profit forecast and investment rating: the company will adhere to the two-wheel drive of "ceramic manufacturing + education industry" in the future. after acquiring Daigo brothers, it will officially cut into the blue ocean market of live education, bringing new profit growth points for the company. We expect the company to earn 0.76 yuan, 1.00 yuan and 1.24 yuan per share from 2017 to 2019. Maintain the company's "recommended" investment rating.
Risk hint: M & An integration is not as expected, education live broadcast market competition is fierce, ceramic main business orders decline.
