China Public Education (002607) 2019 Semi-annual Report Review: Performance Expectations Market Expected Profitability Continues to Improve

China Public Education (002607) 2019 Semi-annual Report Review: Performance Expectations Market Expected Profitability Continues to Improve

Event: On August 20, 2019, China Education announced the 2019 semi-annual report: total revenue.

3.7 billion (+48.

79%), net profit attributable to mother 4.

9.3 billion (+132.


Opinion: 19H1 income 36.

400 million (+ 49% year-on-year), with a net profit of 4.

9.3 billion (+ 132% year-on-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.

1.2 billion.

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

06 and 3.

8.7 billion, a single quarter quarterly growth of 47% in the second quarter, better than the market’s pessimistic expectations.

The company’s income has a strong linear effect with the number of employees, and the size of teachers and R & D personnel directly determines the operating capacity.

There were 880 directly operated branches in 2019H1, an increase of 25 from 701 in the same period in 2018.

5%; the number of employees is 30,790 (+19 compared with the same period last year).

7%), 1946 R & D personnel (YoY + 44.

2%) and 11,604 teachers (YoY + 23.

1%), a good basis for future growth.

19H1 progressive training 1.79 million person-times (+44.

35%), 93 face-to-face training.

10,000 people (YoY + 30.


Income from face-to-face training and online training were 31.

700 million and 4.

4.5 billion, an increase of 38% and 206% each year.

In terms of products, civil servants recruited face-to-face training income18.

1.9 billion (+26.32%), accounting for 50.

00% (-8.

89 pcts); public institution recruitment training income 2.

1.5 billion (+7.

01%), accounting for 5.

90% (-1.

11 pcts); teacher recruitment and teacher qualification face-to-face training income 4.

3.2 billion (+52.

18%), accounting for 11.

89% (+0.

27 pcts); comprehensive face-to-face training income7.

02 ppm (+89.

43%), accounting for 19.

30% (+4.

13%); online training income 4.

4.5 billion (+205.

94%), accounting for 12.

22% (+6.


Gross profit margin 57.

52% (+2.

1pcts), net interest rate 13.

55% (+4.

88pcts), and profitability has increased significantly.

19H1 cost end, selling expense ratio 18.

56% (-3.

32 pcts), the management expense ratio is 13.

75% (-2.

24pcts), the effect of fee control is obvious.

The advance payment for 2019H1 is about 56.

6 trillion, earlier 19.

2 billion percent increase.

Cash received from sales of goods and rendering of services in H1 201974.

760,000 yuan, compared with 54 in 2018H1.

500 million increase of 37%.

2019H1 currency cash 14.

0 million yuan, trading financial assets 46.

0 million yuan, other current assets 0.

900 million, totaling 60.

90,000 yuan, a significant increase from the beginning of the year; cash and cash at the end of 20186.500 million yuan, other current assets23.

30,000 yuan, a total of 29.

800 million.

Continue to create demand with supplements, and the growth model can be replicated at new tracks.

Vocational employment training consists of three major sections: recruitment examination training, career promotion examination counseling, and professional ability training.

Zhong Gong passed dozens of yuan books, thousands of yuan online live lessons, annual lessons under non-agreement classes, and millions of lessons under agreement classes to meet the learning needs of different customer groups.

From a rigid point of view, talent recruitment training (civil servants / teachers, etc.)> Professional promotion (postgraduate entrance examination / note conference, etc.)> Professional ability training (IT, etc.); From a market space perspective, vocational ability training> Vocational promotion> Talent recruitmentTraining, the three major categories are the actual flow pools to achieve category linkage.

From the perspective of market space, (3) vocational ability training> (2) career promotion> (1) talent recruitment training; from a hollow perspective, (1) talent recruitment training> (2) career promotion> (3) careerAbility training.
We predict that the vocational training industry will have about 5000 trillion market space in 2018, YoY + 10-20%.

Specifically, it can be divided into recruitment (50 billion) and skills (4,500 ppm +).
60 billion) and vocational training (about 400 billion).

1) The market space for talent recruitment and training industry is about 50 billion, including civil servants (10 billion), public institutions (10 billion), teacher recruitment (20 billion) and others (10 billion).

2) The market space of career promotion training industry is about 500?
600 trillion, including postgraduate entrance examination, English and academic improvement.

3) The market space of the vocational employment training industry is about 4000 trillion, including accounting (70 billion), IT (30 billion), physicians, law exams and others.

Therefore, on the market space scale, (3) vocational ability training> (2) vocational promotion> (1) talent recruitment training.

Considering the subjective and objective factors such as the difficulty of the exam, the number of recruits, and the severity of the training needs, we believe that the rigidity of talent recruitment training is the greatest.

The continuously accumulated corporate capabilities have been further released in career advancement fields such as postgraduate entrance examinations, IT and finance, and the company is rapidly bringing the vocational education industry into the third stage with a wider space.

While maintaining the steady and rapid growth in the recruitment field, the company has actively deployed new tracks such as the postgraduate entrance examination and IT vocational training, and has achieved rapid growth in scale.

Under the strong momentum of the multi-category growth flywheel effect, the company’s new growth expectations are no longer repeated recruitment, but extended to the vocational education and training of the entire knowledge-based population.

The rapid response capability of the vertical integration built by the four modernizations is the core competitiveness of Sino-Public Education.

Zhong Gong Education has more than 20 years of management experience. Under the vertical integration model, the finance and teaching and research headquarters in Beijing are under unified management, and the financial aspects are controlled. The Beijing headquarters has strong management and control over the branch campus, avoiding the expansion of other training institutions’ headmastersAn out-of-control situation in which overpowered leaders are divided.

Congong provides about 150 types of 220,000 courses to meet the fragmentation needs of the vocational training industry. We believe that the vertical integration and rapid response capability built by Sihua is the core competitiveness of Congong. “Strong R & D-wide channels-fast response-good brand-high reputation”The business closed loop is expected to achieve operating leverage.

(1) Specialization of R & D: In order to cope with changes in advanced admissions standards and selection methods, Zhonggong established a full-time R & D team to achieve separation of R & D and teaching.

At the end of 2018, the company had 1,350 R & D personnel, and was headquartered under the headquarters of the regional teaching and research headquarters. It has 11 professional research institutes and 31 local research institutes. It can quickly grasp the requirements of examinations in various places, track policy changes in a timely manner, and quickly adjust the course structure;2) Full-time teachers: “Big backstage, small front desk” system guarantees that full-time teachers can achieve standardized output of teaching and control of teaching and research results; (3) Channel direct marketing: from 2010, all franchises will be transferred to direct marketing, and by the end of 2018The 701 direct-operating branches of Zhonggong have covered 319 cities in 31 provinces; (4) Operational science and technology: The front-end teaching and research can improve the utilization of middle and senior teachers through the dual master mode, and can use technologies such as operating the Internet and big data to improve management efficiency.2015-2018 net margin increased by 10.


The recruitment business developed steadily, and the growth of new categories was released rapidly.

The release of the leading effect led to a further increase in passenger unit prices.

Driven by the long-term learning trend, the unit price of the civil service sequence has increased by nearly 15% over the same period in 2018, and the unit price of the comprehensive sequence has increased by more than 15%.

The replacement of trainees in the civil service sequence continued to increase by 10% due to the interference of the number of recruited positions.

19H1 postgraduate entrance examination and IT training and other professional capabilities have improved the rapid growth of new business, and its integrated sequence revenue grew by 89 in ten years.


The 4P theory sorts out the business model of the public.

(1) Channel layout: supply creates demand.

The demand for vocational training industry is long tailed. China has 2876 county-level cities and 2663 colleges and universities. The county-level cities 苏州夜网论坛 have channel extensions and continuous coverage of universities. The demand for employment training in fourth- and fifth-tier cities may be further stimulated.

(2) Products / service products: Congong uses dozens of books, dozens of dollars of online live lessons, half a year of lessons under non-agreement classes, and millions of lessons under agreement classes to meet the learning needs of different groups of customers.
From a rigid point of view, talent recruitment training (civil servants / teachers / postgraduate entrance examinations, etc.)> Certificate training (Notes, etc.)> Occupational employment training (IT, etc.); From a market space perspective, vocational employment training> Qualification training> TalentRecruitment training, the three categories are traffic pools are expected to achieve category linkage.
上海夜网论坛 (3) Marketing promotion: Agreement class is the core strategy of Zhong Gong. The reorganization meets the customized needs of high-end customer groups, and the “virtual renewal rate” can be achieved through category linkage (note: most of the vocational training customer groups are freshmen).
At the end of 2018, Zhonggong had 8,657 marketing staff and 2,987 customer service staff, with a total staffing ratio of 45%. The huge pre-sales and after-sales team is the basis for serving a large customer base.
From January to April 2018, the agreed class revenue accounted for about 70%, and the overall refund rate of the agreed public class was about 45%. The improvement of the passing rate in the future is one of the core driving forces for the profitability of Chinese civil servants and other businesses.

(4) Price: Due to the effect of scale, the training services provided by Cong Gong Education are better than their counterparts, and the price is high and the pass rate is high.

Profit forecast, evaluation and rating.
Taking into account the rapid growth of the company’s teacher examination training, postgraduate entrance examination and IT business, the steady growth of the civil service examination training business and the institution’s examination training business, and the dual teacher classrooms that have brought about the improvement of the company’s profitability, we maintain Zhong Gong Education 19?
The 21-year net profit forecast is 17.



95 ppm, EPS predictions are 0.



57 yuan.

The current market value of about 90 billion yuan corresponds to 19/21 P / E of about 52/36 / 26x, maintaining the “Buy” rating of Zhong Gong Education.

risk warning.

Risk of failure to fulfill promised performance and decrease in enrollment.