China Public Education (002607) Annual Report Comment: Revenue Increased 55% Net Profit Increased 120% Management Efficiency Improved

Home / China Public Education (002607) Annual Report Comment: Revenue Increased 55% Net Profit Increased 120% Management Efficiency Improved

China Public Education (002607) Annual Report Comment: Revenue Increased 55% Net Profit Increased 120% Management Efficiency Improved

Investment Highlights: China Education released the 2018 Annual Report on April 8.

In 2018, the company achieved operating income of 62.

370,000 yuan, an increase of 54 in ten years.

72%, net profit attributable to mother 11.

530,000 yuan, an increase of 119 in ten years.

67%, deducting non-net profit 11.

1.3 billion, an annual increase of 124.


Basic income is 0.

19 yuan (the latest equity dilution).

Net cash flows from operating activities14.

08 billion, advance receipts 19.


The company realized deduction of non-net profit in 201811.

1.3 billion, higher than the 18-year performance commitment9.

3 trillion, exceeding the 2018 performance commitment.

2018 distribution plan: The company plans to use the existing total share capital of 61.

6.7 billion shares are the base number, and a cash dividend of 2 for every 10 shares is distributed to all shareholders.

3 yuan (including tax).

The company’s business plan for 2019: ① Continue to carry out digital transformation of operations and make large-scale investments in software and hardware; ② Continue to innovate and upgrade high-value-added products in the field of recruitment and training in the public service category while maintaining the overall cost-effectiveness of the product;Management innovation, improving cost management, optimizing human resource structure, and increasing human resource value; ④ Through the enhancement of IT capabilities, maintain rapid network expansion and sinking speed and increase the development of county-level learning centers.

Brief comments and investment recommendations.


The company’s 2018 revenue increased by 54.

72%, gross margin fell to 0.

5 units.

The company’s 2018 revenue increased by 54.

72% to 62.

370,000 yuan, the total number of trainees increased by 57.

43% to 230.

79 thousand people.

The company’s comprehensive gross profit margin decreased by 0.

5 up to 59.


In 2018, the company accelerated market development, further sinking channels to prefecture-level cities and counties, and consolidating and enhancing the company’s channel advantages.

By the end of 2018, the company had covered 701 learning center sites in 319 prefecture-level cities, with an annual increase of 20.



Face-to-face training: income increase53.98% to 57.

70 ppm, face-to-face training revenue as a percentage of total revenue from 92 in 2017.

96% canceled 92.


In 2018, the company’s proportion of long-term courses continued to increase.

The overall unit price of face-to-face training increased by 13.


(1) Civil service sequence: The civil service sequence income doubles 49.

15% to 30.

820,000 yuan, a decrease in the proportion of face-to-face training income1.

73 up to 53.


(2) Public institution sequence: The income of public institution sequence doubled 37.

91% to 7.

850,000 yuan, a decrease in the proportion of face-to-face training income1.

58 up to 13.


(3) Teacher sequence: Teacher sequence income increases by 60 each year.

58% to 10.

750,000 yuan, the proportion of face-to-face training income rose 0.

77 up to 18.


(4) Comprehensive face-to-face training sequence: Comprehensive face-to-face income has doubled by 187.

37% to 12.

72 ppm, an increase of 10% in face-to-face training revenue.

23 up to 22.



During the period, the cost rate has decreased by 6 per year.

88 averages, net 南宁桑拿 profit attributable to mothers increased by 119 per year.


① Selling expense ratio: decrease by 3 every year.

20 averages to 17.

67%, sales expenses increased to 11.

20,000 yuan.

② Management expense ratio: decreased by 2 every year.

53 up to 14.

00%, management expenses increased to 8.

7.3 billion.

③R & D expense ratio: decreased by 0 every year.41 up to 7.

29%, R & D expenses increased to 4.

5.5 billion.

④Financial expense ratio: decreased by 0 every year.

74 up to -0.

04%, financial expenses are -252.

800,000 yuan, the reason for the negative expenditure is the increase in interest income from time deposits.

Finally realized the net profit attributable to mother 11.

530,000 yuan, an increase of 119 in ten years.

67%, deducting non-net profit 11.

13 ppm, an increase of 124 in ten years.



Online training: Revenue increased by 57.

64% to 4.

44 trillion, the proportion of total revenue from June 2017.

98% increase to July 2018.


2016-2017 online training business revenue was 1.

7.9 billion (+206.

96%), 2.

810,000 yuan (+57.

60%), continuing high growth in 2018.

(1) Online training: 111 online training.

580,000 person-times increased by 91 per second.


In 2016 and 2017, online training was 24 each.

130,000 people, 58.

360,000 person-times; annual growth of 142.

27% and 141.


We believe that the high number of trainings is due to the company’s improvement of online teaching platforms and business innovation.

(2) Unit price for online training: Unit price is 397.

48 yuan / person, previously downgraded to 17.


The online guest price for 2015-2017 was 583.

92 yuan / person, 739.

84 yuan / person, 482.

09 yuan / person.

It rose by 26 each year in 2016.70%, a year-on-year decrease of 34% in 2017.



Revenue by region: The revenue in Northeast China increased significantly.

The company’s business areas are divided into seven regions: northeast, north, east, south, central, northwest, and southwest.

Among them, the revenue in East China accounted for the highest proportion, reaching 25%, and the revenue increase in the Northeast region was the largest, reaching 128.



The quality of cash flow is better, and the company’s ability to obtain cash through the flow of operating assets is a substitute.

In 2018, the company’s operating cash flow increased by 40 each year.

88% to 14.

08 million yuan, the net profit cash ratio fell to 126.

50%, the company’s net profit and cash ratio over the years are greater than 1.

Cash flow from investing activities showed a net decrease, and the value increased by 50 in the first half of the year.

48% to 23.

6 billion.

Cash inflows from financing activities increased significantly to 14.

12 ppm is 10 of cash inflows from financing activities in 2017.

67 times.

Update profit forecast.

It is expected that the company’s net profit attributable to its parent in 2019-2021 will be 16 respectively.

97 ppm, 23.

01 billion, 28.

72 trillion, EPS is 0.

28 yuan, 0.

37 yuan and 0.

47 yuan, an increase of 47 each year.

18%, 35.

63% and 24.

79%, the company’s current sustainable corresponding PE for 2019-2021 is 47 times, 34 times and 28 times.

Judgement of the company.

We believe that Zhonggong Education has become a leader in the industry. Using its many years of management experience, it has expanded its teaching network and established a standardized training system. It has initially achieved the expansion of vocational education categories from civil servant training to public institution training and teacher recruitment training.Management experience was successfully replicated.

The concentration of the vocational education market is still fragmented. China Education has a nationwide vertical integration and rapid response capability. At present, it has basically formed a vertical integration and rapid response capability that emphasizes R & D, strong channels, and rapid response.

We expect the company to connect capital market, endogenous level, and capital to promote the expectation of companies to accelerate product conversion, extension level, change market concentration, leading companies are expected to expand the scale, capital, technology and other advantages, integrate high-quality resources, and continue to expand market shares.

Taking into account the company’s expected improvement in IT capabilities, such as improved management efficiency, channel sinking and category expansion, etc., we believe that the company is the most pure stock of A shares and a leading company in the field of vocational education.There is a certain premium on ownership.

Taking into account the company’s 2018 revenue scale and brand power, the company’s assessment is closer to the future of leading US education stocks and the valuation of New Oriental.

Kaiyuan shares are instrument and meter, vocational education dual main operations, and the instrument and meter business must be lowered.

① PE estimation method: 50-52 times PE in 2019, corresponding to 14.

00 yuan / share -14.

56 yuan / share.
② EV / EBITDA estimation method: 45 times EV / EBITDA in 2019, with an enterprise value of US $ 92.5 billion, a net debt of US $ 2.6 billion, and a market value of US $ 89.9 billion, equivalent to a value of 14.

58 yuan / share.

Given 47 times EV / EBITDA in 2019, the enterprise value is 966 trillion, the net debt is 26 trillion, the market value is 940 trillion, and the corresponding value is 15.

24 yuan / share.

This method corresponds to a value of 14.

58 yuan / share -15.

24 yuan / share.

Combining the two results gives the company 14.

00 yuan -15.

A reasonable value range of 24 yuan, maintaining the “continuous market” rating.

risk warning.

Risk of market competition and risk of staff turnover.

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