Beijing Shengtong Printing Co.Ltd(002599) (002599)
Based on publishing business, develop quality education and training. The company’s main business includes publishing comprehensive services and quality education and training services. After completing the wholly-owned acquisition of Lebo Lebo in January 2017, the company entered the field of children’s programming quality education. So far, it has formed an industry leading enterprise covering end B, end C and end g, youth programming training and evaluation, teaching aid sales and programming education campus services. Le Bo Le Bo’s revenue increased by – 33.2% / 219.8% to RMB 221 / 176 million in 2020 / 2021h1, with a net loss of RMB 139 / 09 million. The business situation in 2021h1 has been significantly improved. The company will implement the second phase of equity incentive plan in 2021 to effectively bind the interests of employees with the development of the company.
After the “double reduction”, demand transfer + policy support, children’s programming training is expected to be released in 2022. After the “double reduction” policy, parents pay more attention to quality education, and many discipline institutions have made it clear that discipline training operations will be terminated by the end of 2021. The training demand is expected to transfer to non discipline training including children’s programming, and it is expected to be concentrated and large-scale in 2022. In addition, children’s programming education has also received policy support since 2017. Programming education has been included in primary and secondary schools in many regions of the country. In terms of market scale, the market scale of China’s children’s programming industry will be 27.8 billion yuan in 2021, and is expected to reach 51.5 billion yuan in 2025, CAGR = 16.7%. At present, the penetration rate is only 2%. Under the favorable policies, the improvement of penetration rate is expected to become the core driving force for the improvement of scale in the future. After the “double reduction”, the pre charging of training institutions will be subject to capital supervision, the expansion speed of the industry will be controlled, and training institutions with mature operation capacity and perfect channel construction are expected to benefit.
The curriculum system and channels are leading, and the whole industry layout of C / B / g end. Lebo Lebo has accumulated a relatively complete offline + online curriculum system for groups aged 3-18, and established Shengtong Education Research Institute in 2020 to continuously optimize and iterate the curriculum. In addition, the company works closely with industry upstream suppliers to ensure the supply of high-quality teaching aids. In terms of channels, as of 2021h1, the company has 167 direct sales centers and 450 franchise centers, covering 31 provinces, cities and autonomous regions in China. Relying on TOC training, the company carried out the whole industry layout of to B and to G programming education, acquired the b-end business of Zhongming digital, a provider of Siasun Robot&Automation Co.Ltd(300024) programming teaching aids, and established the science and technology into campus business department to layout the g-end business. In addition, the company actively held / participated in the Siasun Robot&Automation Co.Ltd(300024) competition, and the students achieved excellent results in the competition to enhance the influence in the industry
Investment suggestion: the company has two main businesses: comprehensive publishing service and quality education training service. As a leading enterprise in children’s programming in China, Lebo Lebo has a complete online + offline curriculum system for 3-18 years old to carry out the whole industry layout of programming education. Under the favorable quality education policy, the demand for children’s programming training is expected to increase in 2022, and Lebo Lebo is expected to fully enjoy the favorable policy. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be 1.32/2.17/260 billion yuan, CAGR = 40.3%, giving the company a target market value of 5.6 billion yuan and a target price of 10.32 yuan, corresponding to 42 / 26 times in 2021 / 2022. The company will be given a “buy” rating for the first time.
Risk tip: the risk of epidemic recurrence, stricter training and supervision policies, intensified market competition, franchisees’ risk control, and the profit in the process of business development does not meet expectations.
