Zhonggong Education (002607): The company model is still the best solution for the current growth in the industry
How to understand the main points of investment-discard the intermediate variables, and go straight to the essence of growth.
Consistent with market perceptions, we believe that the most essential factors affecting the size of the non-educational vocational training industry are only three points: the total number of job applicants, the expected return on the position and the value created by training, the participation rate in the market, the recruitment ratio, and the customerThe unit price and internal competition in the industry are only intermediate variables, which will not substantially affect the size of the training industry, and it is difficult to make follow-up predictions.
Our framework is helpful to understand the objective fact that the industry can still achieve “both volume and price” in the context of declining enrollment in recent years.
We also believe that the reform direction of civil servants and public institutions is classification, rather than simply reducing the number. The attractiveness of public posts in the job market will continue to have a comparative advantage, which will ensure the long-term growth of the public training and training market.
Thinking of the company model-so it is R & D advantage, it is better to say management ability.
Although the production and sales process is relatively simple in the education and training industry, the business models are different, which has created differences in the growth rate and quality of different education and training enterprises.
It is difficult to use a shorter length and a few dimensions of the data to judge the model better, because the dimension of time needs to be added. In fact, the past two decades have also been the second rise of the education and training industry, and the model has gradually been optimized.
We understand that the core of the Sino-Government model lies in the stronger management capabilities of the headquarters. The main means include more improvements, expansion of the refinement and standardization in the background. The advantages are: 1) for cost, the ability to control costs is stronger, and it has a certain amount of expenses.Intensive scale effect, the gross profit margin will not change, which is particularly important for the education industry with a low net interest rate; 2) R & D at headquarters becomes an important driving engine for the company’s expansion, because we think this model is more suitable for the industry.Changes over the years-mainly the rapid growth of non-civil servant serial training products and the rapid conversion of training products, especially if considering the regional differences that these changes may have in different regions of the country, more intensive management resource deployment is undoubtedly the current market.Harvest the optimal solution for growth.
Core assumptions for 深圳spa会所 profit forecasting: Several important assumptions for our company’s profit forecast include: In 2019/2020, the company ‘s face-to-face participation growth rate will be 32% / 23%, and the customer unit price increase will be 7% / 5%.The interest rates are 61.
6% / 62.
5%, the expense ratio is 39.
5% / 39.
0% (reduction by 0.
5pct / 0.
5pct), the company’s performance in these several income statement core financial indicators is quite stable, and gradually reflects the scale effect of management.
Maintain “Buy” rating.
It is estimated that the company’s attributable net profit for 2019/2020 will be 16 respectively.
490,000 yuan, the corresponding EPS is 0.
36 yuan, corresponding to a PE of 46/33 times, maintain “Buy” rating.
Risk reminder: We believe that the current risks of the company 北京夜生活网 mainly come from the outside, including the unexpected changes in market competition. The slenderness affects enrollment defects and pricing strategies. The online competition is becoming fierce and the company’s online business exceeds expectations.Secondly, it is recommended that due attention be paid to the company’s internal management risks and market system risks.