Public Education (002607): It is expected that the net profit of 19Q1 will increase by about 300%. The strong performance advantage highlights the Matthew effect and promotes further development.

Public Education (002607): It is expected that the net profit of 19Q1 will increase by about 300%. The strong performance advantage highlights the Matthew effect and promotes further development.

Brief performance review On March 29, 2019, China Education announced the 2019Q1 performance forecast, which is expected to achieve net profit attributable to mothers.

88-1.

150,000 yuan, an increase of 269% -321% year-on-year, and may be zero in the first quarter of 2018.

5.2 billion.

Operational analysis The substantial growth of profit growth in the first quarter of 2019 is the continuous increase in the number of training scholars, the continuous increase in the unit price of training, the increase in revenue scale, the continuous market leadership and scale advantages, the dual-division, independent IT system development and upgrade, and other digital operations.Significant progress has been made in transformation measures, and management efficiency has improved significantly.

We expect that the categories in other comprehensive series are rich, and the change in product structure will continue to increase the contribution to revenue growth, especially the postgraduate-related training is worth looking forward to.

The cost-side expansion of Q1 recruitment related training, Q1 is the low season of profit.

Based on 2018 historical data, revenue from January to April 2018 accounted for 23% of previous revenue, and net profit attributable to mothers accounted for only 5% of higher net profit.

If we assume that the profit in April 2019 and April 2018 is flat (1.

09 million yuan), the net profit attributable to mothers is expected to be realized from January to April 20191.

97-2.

24 ppm, an annual increase of 80% to 105%.

The Matthew effect of CCP education enjoyment is expected to further manifest.

CPG education is a “recruitment exam”. Because of the breakthrough in trial and error costs, the premiums of big brands will become stronger and stronger, and the Matthew effect bonus enjoyed by CPG education will become stronger and stronger.

Cong Gong Education’s “big backstage, small front desk” heavy education and research standard play mode is an important barrier to competition. What Cong Gong is doing now happened in 2008, thinking about what the K12 industry is doing, and it is transforming the whole with an industrialized method.industry.

The four 深圳桑拿网 characteristics of the track where CCC is located are as follows: Feature 1: Careful combination of examinations and employment is in line with the thinking of Chinese students.

Feature two: The demand is extensive and in-depth, and the demand in low-tier cities is still widespread, with ample space for sinking.

Feature three: The segmented circuit is common, and the competitive advantages of leading companies can be transferred.

Feature four: Most of them are selective examinations, and the content of the examinations is continuously iteratively upgraded, reflecting the advantages of research and development institutions.

The growth path of CPG in the future: ① The penetration space of low-tier cities is still huge, ② Expansion of other curriculum categories (such as postgraduate entrance examinations, and CCC ‘s overall large-scale back-office standardization model makes it possible to achieve cross-category expansion). ③ The participation rate is still improving.More and more people will be “passive.”

Investment Suggestions We expect Zhongguo Education to achieve operating income of 89-2019.

0/113.

500 million, a ten-year growth rate of 41% / 27%, net profit attributable to the mother16.

0/21.

500 million US dollars, a 10-year growth rate of 40% / 34%, corresponding to 2019-2020 price-earnings ratios of 50/37 times, we believe that the company’s 19Q1 performance is dazzling, exceeding market expectations, leading advantages are expected to continue to highlight, maintain the buy rating,Raise target price to 14.

5 yuan.

Risk Tips Risk Tips: Policy risks; increase in participation rate may be less than expected; risks such as more recruits.