Events:
The company announced that Onli Technology, a wholly-owned subsidiary of the company, intends to sign an "equity transfer agreement" with Zhi Cube Investment to acquire 28% of the shares held by Zhiang Investment with its own capital of 18 million yuan. Zhiang Investment will become a wholly-owned subsidiary of the company.
Comments:
Zhiang Investment is one of the carriers of the company's national business expansion. After several years of model exploration and brand promotion, the campus of Zhiang Investment has completed the transition from the training period to the development period, the product system has been gradually improved, and a certain degree of brand influence and market recognition has been formed. has the ability of rapid expansion and development. The number and revenue scale of the campuses under Zhiang Investment have continued to grow, and the profitability has gradually improved. By the end of July 2020, the mature campuses of Zhiang Investment have made a profit. After the completion of the acquisition of the remaining shares, the subordinate campuses of Zhiang Investment are located in the economically developed regions of the Yangtze River Delta. Onli Education strives to build it into a benchmark for national business development and firmly promote the expansion of education and training business throughout the country.
Established 36 years old teaching and training institutions, K12 subdivision business line is complete. Onli Education is mainly engaged in K12 subject training, quality education, vocational education, international education, etc., especially in the field of K12 education, the company has a deep accumulation, is a domestic veteran K12 teaching and training institution, and its revenue exceeded 2 billion yuan in 2019. In the head position; by the end of June 2020, the company has a total of 275 direct teaching centers across the country (mainly concentrated in Shanghai), and more than 1000 cooperative schools with a solid offline network foundation. 1) in terms of business structure, compared with other K12 teaching and training institutions, the company has a relatively complete line of business, with education and training sub-brands such as "Onli Foreign language", "Onlizhi Cube", "Aung Li Middle School students", "Onli Children" and so on. 2) conforming to the development trend of quality education, the company has spread a wide range of sites in the field of quality education, such as sports, STEM, piano, chess, calligraphy and painting, etc., but the company's layout in the field of quality education has diluted the profit margin to a certain extent.
The management structure and business line have been clearly defined, and the "one body and two wings" development strategy has been established. From 2018 to 2019, Zhongjin and Changjia, the two major shareholders of the company, joined the board of directors, actively and deeply participated in the company's management, made major adjustments and combs to the company's organizational structure, overall business and management system, and finally established the "one body and two wings" development strategy in 2019. At present, the company has established a clear internal management structure and future business line planning, that is, focusing on K12 core business (including quality education). The two wings refer to national expansion + science and technology empowerment: 1) at present, the company's direct teaching center is mainly concentrated in Shanghai. From the perspective of long-term development, the company has established a plan to expand outside the province and will give full play to the advantages of the campus network of more than 1000 cooperative schools across the country. 2) in line with the development trend of education science and technology in the future, the company actively promotes science and technology enabling education, arranges online education, and accelerates the development of offline online integration (OMO) mode combined with offline physical teaching centers.
Investment suggestion: as a veteran K12 teaching and training institution, the company has set up a very complete K12 training product line with rich educational content and a solid foundation of offline outlets, and its revenue has exceeded 2 billion in 2019, which is at the head of the K12 teaching and training industry. in the future, it will be based on the Yangtze River Delta region to promote business expansion to the whole country. Referring to comparable companies in the industry (TAL Education Group, New Oriental Education & Technology Group), the net interest rate of K12 training industry is about 15%, and the company's profit margin has much room for improvement. Considering the impact of the epidemic in 2020, we estimate that the company's net profit from 2020 to 2022 will be 134,192 million yuan respectively, corresponding to 0.11 EPS 0.47max 0.67 times, PE 148-34-23 times, giving 2021 40 times the target PE, corresponding to the target price 18.8 yuan, giving a "buy-A" rating.
Risk hint: the uncertainty of the epidemic affects the rhythm of offline class resumption and income recognition, offline remote expansion is not as expected, and enrollment is not as expected.