Zhonggong Education (002607) Commentary Report: Public Examination Training Contradicts Growth, Long-term Opportunity for the Construction of the Company’s Vocational Education Ecological Platform

Zhonggong Education (002607) Commentary Report: Public Examination Training Contradicts Growth, Long-term Opportunity for the Construction of the Company’s Vocational Education Ecological Platform

Event: The company released the semi-annual report for 2019, and the revenue of H1 in 2019 was 36.

37 ppm, an increase of 48 in ten years.

79%, net profit attributable to mothers4.

930,000 yuan, an increase of 132 in ten years.


Core point of view: Public examination training has grown by 26% against the trend, high growth of diverse categories, and the proportion of teachers, comprehensive and online business revenue has increased by 10pct.

The report summarizes that the company’s revenue and net profit attributable to mothers maintained high growth, of which the growth rate of civil servants / public institutions / teachers / comprehensive / online training revenues were 26% / 7% / 52% / 89% / 206%, (In terms of revenue, we focus on three dimensions: ①In the context of civil service contraction, the company merged brand advantages to seize market share and launched more market-oriented curriculum products. The number of civil servant training and average customer unit price increased by 10% / 15% respectively;② Benefiting from the company’s vigorous layout and rapid growth of comprehensive categories centered on postgraduate entrance examination and IT training, we expect to gradually maintain a growth rate of about 100%; ③ The company vigorously develops online education and launches more high-end online + combined courses to achieveOnline training categories both increased in volume and price).

Benefiting from the company’s scale effect, the gross profit margin was extended and increased2.

2 points to 57.

52%; sales expenses and management expenses remain reasonably increased. At the same time, the company continues to strengthen R & D expansion. R & D expenses increased by 49%. Financial expenses increased by 3843 million due to the increase in collection fees and short-term debt. At the same time, 5397 million financial management was confirmed.Investment income.

The campus has maintained rapid expansion, with teaching and research as the focus of investment, and digital transformation + layout of learning bases to improve efficiency.

The number of reports, the company’s direct branches increased by 179 to 880 (杭州桑拿网+ 25%) compared with the end of 18 years, the number of employees / R & D personnel / teachers increased 20% / 44% / 23% compared to the end of 18 years, the proportion of R & D personnel in the number of teachersFrom the end of 18 to 14.

3% increased to 16 in 19H1.


Training sessions 178.

90,000, up from 44 previously.

35%, including face-to-face training and online training for 930,000 / 860,000 people, respectively, an increase of 31% / 63%.

The company actively promotes the application level of dual teachers, initiates the integrated and coordinated re-engineering of the entire business system, and realizes the dynamic monitoring of online operations; the company has deployed a one-stop learning base and improved it.

We believe that the study base is suitable for the postgraduate entrance examination, IT, and other courses that need to extend the study cycle. It is conducive to improving the learning efficiency of students, improving the efficiency of company management and operation, and improving the profitability of the company. At the same time, through online monitoring and management of the dual-teacher classroom, high-quality teaching can be provided by famous teachers.The content was expanded to multiple scattered teaching sites across the country, and online management operations were integrated to improve teaching efficiency and quality.

Earnings Forecast and Estimate: We maintain the company’s net profit attributable to its mother to 19-20 years.



50,000 yuan, the corresponding EPS is 0.



53 yuan / share, corresponding to PE is 54/38/28 times.

We are optimistic about the company ① Based on the public test training track, settling down high-quality successful genes such as deep cultivation and excellent service capabilities, reshape the track ceiling and boundaries, and improve the industry service model and ability level. ② Vocational education centered around the concentric circle of college student usersExpansion of Kao Pei category, ③ slender-to-skill training and the layout of education and vocational education industry, develop the nation’s leading vocational education ecological platform, and maintain a highly recommended level.

Risk reminder: policy risks, registrations increase significantly

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