Why does Sixue want to be the "Haidilao International Holding" of the teaching and training circle? Based on the differences of students' grades, study habits and family conditions, the fragmentation of the training industry is remarkable. Thinking music education mainly provides extracurricular training for students in the middle and lower reaches of primary schools. compared with excellent students' pursuit of the depth and breadth of the curriculum, students in the middle and lower reaches need more supervision and attention from teachers. this makes the "Haidilao International Holding" type hosting training service has a huge demand space. Relying on this service model, Sianle is rising rapidly in Shenzhen. From 2016 to 2019, its revenue has grown by leaps and bounds from 171 million yuan to 711 million yuan, with a compound annual growth rate of 60.9%. In terms of income, Sianle accounted for 2.7% of Shenzhen in 2019, ranking second in the industry.

From Shenzhen to Dawan area, what are the advantages of thinking music in the expansion of different places? 1) in terms of teachers, the excellent mode has higher requirements for teachers' academic qualifications, while in third-and fourth-tier cities, graduates from famous schools are scarce, so learning and thinking about excellence sinks into low-line cities through dual-division live classes. As for the main target group of students, teachers' supervision and tutoring are more important than academic qualifications, so the requirements for teachers' academic qualifications are relaxed, so that it is no longer the bottleneck of sinking. 2) in terms of opening stores and getting customers, the participation rate of low-line cities is much lower than that of first-tier cities. Sianle activates the local training market by promoting free summer vacation experience courses, so as to achieve rapid batch enrollment and conversion of positive-priced courses. In 2018, students from summer experience classes accounted for about 38% of the total number of students in 2018, which is the main way to think about Lelaxin. 3) Sianle adopts fission mechanism to support rapid expansion, through mature campus team to support the construction of new campus in different places, and to carry out master-apprentice system and commission system to realize the rapid training of the management of the new campus.

Look at the corporate culture of Sikuole from the perspective of partner plan and incentive mechanism. 1) Sikole has set up group partners, city partners, teacher partners, and so on, and each level can participate in the dividend after completing the goal. The company will fully share the fruits of growth with employees to enhance the combat effectiveness and stability of the team. 2) based on the company's enrollment strategy of offering a large number of free courses, the full class rate is no longer the focus of teachers' assessment, the company has established a salary model of increasing marginal income for teachers, in order to encourage teachers to increase the number of students they bring, so as to indirectly improve the full class rate. 3) by the end of 2019, Hongtujiaye, an employee shareholding platform, held 24.8 per cent of the company, including CEO, CFO, city principals and other executives and core backbones, and the company also launched a share option plan to deeply bind the interests of employees. In recent years, the turnover rate of principal staff is close to zero.

Looking forward to the future, how big is the room for the development of Sixue? The company's expansion in the Greater Bay area has basically run smoothly. From 2020 to 2023, the company plans to open 60, 50, 52 and 72 new learning centers in the Greater Bay area respectively. The number of learning centers in the Greater Bay area is expected to reach 334 by the end of 2023, an increase of 234% compared with the end of 2019. Based on the 11 cities in the Greater Bay area that the company plans to enter in the next 3 years, it is estimated that the K12 training market space is 54 billion yuan. Assuming that the future market share of thinking music reaches 5%, it corresponds to a potential income space of 3 billion yuan. In the plan for the next five years, the company will include the commander of the army in the third corner of the army and go to the whole country, and its income is expected to exceed 5 billion yuan within five years.

Profit forecast and valuation: the company's revenue from 2020 to 2022 is expected to be 8.75,13.60 and 1.949 billion yuan respectively, an increase of 22.9%, 55.5% and 43.3% respectively, and the net profit of returning home is 1.62,2.42 and 350 million yuan respectively, an increase of 71.1%, 49.1% and 44.8% respectively. The corresponding PE is 70,47,32 times respectively, and the "Buy" rating is given.

Risk tips: network expansion is not as expected, and management follow-up in rapid expansion is not timely.