China Public Education (002607) 2019 H1 Performance Express Review Comments: H1 Performance Increases Continues to Pay Attention to the Traditional Peak Season in the Second Half of the Year

Company dynamics The company released the 2019H1 performance report, which is expected to achieve attributable net profit in the first half of the year4.

25ppm-5ppm, an increase of 100 in ten years.

14% -135.


Matters comment H1 performance continued to increase rapidly, with a large scale to complete 1.3 billion performance commitments 2019H1 companies are expected to achieve attributable net profit4.

25 ppm-5 ppm, an annual increase of 100% -135%, of which Q1 is profitable1.

0.62 million yuan, an average of 51.94 million yuan in the same period last year; Q2 expected earnings 3.

19 ppm-3.

94 trillion, 2 last year.

640,000 yuan, an increase of 21% -49% at the beginning of this year.

As the national examination, teachers, public institutions and other recruitment are active in the second half of the year, the company’s income is obviously interchangeable. The income ratio of 18H1 / H2 is 39% / 61%, and the attributable net profit ratio is 18% / 82%.Corresponding net profit margins are 9% / 25%, and the second half of the year is usually more profitable.

The income-side company has a leading advantage in public examinations. Newly supported category teachers, postgraduate entrance examinations, IT enters the fast track, and in-depth integration development between categories, creating momentum for continued growth. The dual-teacher system on the expense side has been implemented, digital transformation, and course product upgrades have achieved fee 杭州桑拿网 reductionImprove efficiency.

We believe that the profitability of 19H2 companies is still expected to achieve rapid growth, with a high probability of fulfilling 1.3 billion performance commitments.

Apply for credit to build a comprehensive learning base to quickly realize the company’s vocational education products and services3.

0 version upgrades, actively responding to the explosive growth of new categories such as graduate entrance examinations and IT, accelerating the trend of the expansion of recruitment training and learning cycles. The company plans to quickly integrate the pace of investment in hardware facilities such as learning bases.The total credit line is no more than 4.5 billion U.S. dollars.

The integrated learning base integrates teaching, training, accommodation, and logistical support, providing a full-service chain learning environment for this book, upgrading the learning experience, and improving the quality of teaching.

The moat has been continuously deepened in various dimensions. The leader of vocational education is Hengqiang. The emphasis is on R & D and teaching. The company is the first to adopt independent R & D. The R & D team exceeds 1,000 people. The R & D expense rate has been maintained at 6% for a long time.The team has nearly 10,000 people and has accumulated rich R & D and teaching experience.

Second, the entire category, continuously deepening the advantages of public examinations, public institutions, and teacher recruitment and other product structures, launching agreement courses to increase customer unit prices, actively expanding new areas such as postgraduate research, IT, finance and economics, and using proven replication experience to continue exploringThe new track opens up the whole category of high-end vocational education.

Third, strong channels. At the end of 2018, 701 directly-operated branches and learning centers were established in 319 prefecture-level cities in 31 provinces across the country. The scale of the industry is leading. In the future, it will sink to counties and universities to serve long-tail demand.

Fourth, digital transformation, increasing investment in science and technology infrastructure and technical teams, improving the rapid response capabilities of vertical integration, and continuously improving operational efficiency.

The investment proposal does not consider the impact of the investment in the comprehensive learning base for the time being, and maintains the profit forecast. It is estimated that the company’s attributable net profit for 2019-2021 will be 16 respectively.



470,000 yuan, the corresponding EPS is 0.



49 yuan / share, corresponding to PE is 49/33/27 times (based on the closing price of 7/7/2019).

The company is a domestic leader in vocational education. It enjoys policy dividends at the industry level. It benefits from the emphasis on research and development, full categories, strong channels and digital transformation of operations. The company has prominent advantages in scale, improved operating efficiency, and deepened moats.

We are optimistic about the company’s long-term growth ability as a leader in vocational education under the background of favorable policies and its own strength. The risk of maintaining an “overweight” rating suggests that the impact of institutional reforms continues to lead to civil servants, and the enrollment of public institutions has fallen short of expectations.Forecast of growth rate of business enrollment; development of new categories leads to continued decline in gross profit margin; fee reduction effect is less than expected; fund management income is less than expected.