Zhonggong Education (002607): 100% to 136% increase in performance growth Concerned about the elasticity of performance brought by income growth in the second half of the year

Zhonggong Education (002607): 100% to 136% increase in performance growth Concerned about the elasticity of performance brought by income growth in the second half of the year

China Education estimates that it will return to its mother’s net profit in H1 20194.


00 ppm, an increase of 100% to 136% in a year.

The company’s 2018 revenue and attributable profit were 62.

37 and 11.

5.3 billion.

Revenue for the four quarters of 2018 was 8.

1, 16.

4, 17.

3 and 20.

700 million; return to mother’s profits were -0.

52, 2.

64, 3.

29 and 6.

12 ppm, the excess income of Q3-Q4 compared to Q2 matches the increase in profits after tax.

In the first and second quarters of 2019, the profit attributable to mothers was 1.

06 and 3.


0.94 million yuan, a quarterly increase of 21% in the second quarter?

The revenue and profit of CPG’s main business continued to increase compared with the same period of the previous year, mainly due to (1) the market leading position and scale advantages continued to increase, and the grassroots public service positions were expanding well.

(2) The one-stop learning facilities have been fully improved, and the deep integration between categories has become increasingly apparent.

(3) Significant progress has been made in the new round of teaching and research improvements. The dual-teachers and digital transformation of operations, and upgrading of course products have continued to deepen.

The company’s cost is rigid and it pays attention to the performance elasticity brought by the revenue growth in the second half of the year.

We estimate that 19H1 revenue will be approximately US $ 37 + billion, with an annual growth of 50% +; 19Q1 and Q2 revenue will be approximately US $ 13 and 24+ billion, respectively, with an increase of 62% and 50% +.

Taking into account the growth rate of business income of various departments, civil servants / public institutions 20% +, teachers 70% +, postgraduate entrance examination 100% +, we believe that revenue will continue to grow by 50-60% in 2019, about US $ 93-100 billion.

Taking into account revenue growth and rigid cost expenditure in the second half of the year, we still maintain our 2019 net profit forecast of approximately $ 1.7 billion.

Vertical integration and rapid response capabilities are the core competitiveness of China Education.

The vocational education training track has millions of market spaces, long-term effects of industry characteristics, demand fragmentation and supply to create demand, front-end marketing and channels of Zhonggong Education, mid-end teaching and research, and vertical operations with three dimensions of vertical integration and rapid response capabilitiesEstablish core competitiveness, non-educational training and dual-track layout of academic schools, and it is expected to benefit deeply from the policy dividends of the vocational education industry.

(1) The front-end channel covers all prefecture-level cities in China, and can quickly respond to the admissions information and accurately feedback the content of the admissions; (2) The mid-end teaching and researching has a strong central teaching and researching team of “big backstage, small front desk”, and can be developed through headquarters, branch campuses(3) The operator has more than 20 years of management experience. The financial and teaching and research headquarters in Beijing are under the control of the financial aspects. The Beijing headquarters has strong control over the branch campus, avoiding the out-of-control situation where other training institutions expand their locations in different places.

Investment suggestion: do we maintain CCP Education 19?
The 21-year net profit forecast is 17.



1.3 billion, EPS forecasts are 0.


49 yuan.

At present, the market value of Sino-Public Education is 杭州桑拿网 approximately 84.4 billion, corresponding to 45xPE in 19 years. Maintaining the “Buy” rating of Sino-Public Education.

Risk reminder: the risk that performance commitments cannot be fulfilled.