Kevin Education (002659): Education business continues to grow at high speed

Kevin Education (002659): Education business continues to grow at high speed

Event: The company released the 2019 interim results forecast. It is expected that the operating income will increase by more than 70%. The net profit attributable to shareholders of the listed company is expected to be -7 to 53 million yuan.Progress is smooth, training and camp business are developing rapidly, and the education industry chain is gradually improving.

Gorgeous transformation of state-owned assets platform, education business continued to grow rapidly.

Since 2016, the company has gradually transformed into high-end education. In 2017, it replaced traditional businesses. The company has transformed into a listed company with Haidian’s state-owned assets as its main business and international education.

In 2017-2018, the company’s education operating income was 0.

92 ppm and 2.

50 ppm, a year-on-year growth of 286% and 173%; from January to June 2019, the operating revenue growth rate is expected to be more than 70%. It is expected that the scale of education business for new students through the second half of the year will further expand, and the company’s high-speed growth in education 深圳spa会所 business is worth looking forward to.

The gross profit margin has turned positive and the company is expected to turn a profit.

With the expansion of school students, the company’s profitability has improved.

In the first quarter of 2019, the company’s gross profit margin was 19.

53%; The company’s gross profit margin continued to be positive from January to June 2019.

As of the end of 2018, there were about 1,227 students in the two schools of the company. It is estimated that there will be about 600 new students in the two schools in the 2019-2020 school year, and the number of students will increase by about 1,800.

The capacity of the two schools of the company is expected to be 5,400. By September 2019, the school premises utilization rate of the two schools of the company will reach 30%, which is expected to drive the company to turn a profit.

Actively develop the education industry chain, and training and camps are expected to develop.

Relying on physical schools, the company actively expands and lays out sports, art training, camp education and brand export. After 3 years of development, the company’s education industry chain has gradually improved.

At present, the company has two international schools-Kevin Haidian and Kevin Chaoyang, with sports and art training platforms such as Kevin Zhixin, Kevin Letter, Kevin Star Arts, and the healthy development of education-related industrial chains around physical schools.pattern.

According to the announcement, the company plans to increase the quality education platform for young people through targeted issuance, which is expected to invest 11.

US $ 5.3 billion, of which US $ 1 billion is planned to be used to raise funds. This non-public offering has entered the secondary feedback stage.

Estimate and profit forecast: The company’s operating income is expected to be 3 in 2019-2021.

9.5 billion, 6.

23 ppm and 8.

41 trillion, with annual growth of 63.

48%, 57.

58% and 35.

00%; net profit attributable to shareholders of the parent company is 0.

5.4 billion, 1.

2.6 billion and 1.

76 trillion, each year -155.

63%, 131.

05% and 39.

80%.

EPS are 0.

11 yuan, 0.

25 yuan and 0.

35 yuan, the corresponding PE is 68.

2 times, 29.

5x and 21.

1x, PB is 1 respectively.

7, 1.6 and 1.

5.
The company is the only education listed company with international schools as its core assets in the stock market. In 2019, the company is expected to turn losses into profits and promote the release of future performance.

Optimistic about the company’s layout in the field of international schools, the future development prospects of the education and sports industry and Haidian education resources, maintain the company’s “Buy-A” rating, target price 11.

75 yuan.

Risk warning: changes in international education policies, enrollment falls short of expectations, slow release of performance, etc.