\u3000\u3 Bohai Water Industry Co.Ltd(000605) 098 Shanghai Action Education Technology Co.Ltd(605098) )
Event: the company released its annual report for 2021. During the reporting period, the company achieved an operating revenue of 555 million yuan, a year-on-year increase of 46.62%; The net profit attributable to the shareholders of the parent company was 171 million yuan, a year-on-year increase of 60.05%; Earnings per share was 2.21 yuan, a year-on-year increase of 30.77%. The company plans to convert 10 shares into 4 shares and distribute 15 yuan.
The company’s performance grew faster than expected, and advance receipts helped the rapid growth. In 2021, the company realized an operating revenue of 555 million yuan, with a year-on-year increase of 46.62%; The net profit attributable to the shareholders of the parent company was 171 million yuan, a year-on-year increase of 60.05%; Earnings per share was 2.21 yuan, slightly higher than the previous EPS forecast of 1.95 yuan. The main reason for the higher than expected growth of the company’s performance is the rapid growth of management training and management consulting business. In 2021, the newly signed business volume of management training and management consulting was about 689 million yuan, which was 1.82 times of the operating revenue in 2020, ensuring the release of the company’s performance. By the end of 2021, the company’s contract liabilities were 776 million yuan, mainly due to the tuition fees and management consulting fees collected in advance. The ratio of the company’s order revenue (contract liabilities / operating revenue) was about 1.40 times, which enhanced the certainty of the company’s performance in 2022. Considering the rapid growth of the company’s market personnel, the company’s newly signed business volume is expected to maintain a rapid growth in 2022 and is optimistic about the continuous growth of the company’s future performance.
The company has strong profitability and there is still room for improvement in the future. In 2021, the company’s gross profit margin was 79.05%, including 83.62% for management training business and 44.30% for management consulting business. The gross profit margin was at a high level on the whole. Since 2019, the company has been committed to the standardization, systematization and digitization of management consulting business, and has voluntarily abandoned “non-standard” projects, resulting in the contraction of management consulting business. In 2021, the company has launched standardized products of management consulting business and put them into the market. The company’s management consulting business has stopped falling and rebounded. With the expansion of the scale of management consulting business, the gross profit margin of management consulting business is expected to increase, Thus driving the overall gross profit margin upward. At the same time, the company’s net interest rate and roe are both high. In 2021, the company’s net interest rate was 31.15%, 2.51 percentage points higher than that in 2020, and the net interest rate hit a new record high; Roe (weighted) was 19.46%, down 7.13 percentage points from 2020, mainly due to the rapid growth of equity capital brought by IPO.
The operating income continues to flow in and the asset liability ratio is low. In 2021, the company received 714 million yuan in cash from selling goods and providing labor services, with a year-on-year increase of 34.14%, the cash to cash ratio of 1.28, and the net cash flow from operating activities was 377 million yuan, which was far greater than the company’s net profit in the same period, highlighting the good cash flow of the company. The quality of the company’s assets is high. By the end of 2021, the company’s monetary capital and trading financial assets were 1.081 billion yuan and 637 million yuan respectively, accounting for 53.83% and 31.74% of the total assets respectively; The company’s liabilities are mainly contract liabilities, interest free loans and bonds. By the end of 2021, the company’s contract liabilities were 776 million yuan, accounting for 83.81% of the total liabilities. The company’s asset liability ratio is low, and the debt ratio after excluding advance receipts is lower. By the end of 2021, the company’s asset liability ratio was 46.10%, down 15.57 percentage points from 2020; The asset liability ratio excluding advance receipts was 7.46%, an increase of 0.39 percentage points over 2020, highlighting the company’s relatively stable business strategy.
Launch Omo digital business school to create the second growth curve of the company. In November 2021, the company launched Omo digital business school, which is an enterprise training system integrating online enterprise university platform and offline business school system, to provide enterprises with management solutions integrating three practical effects and values of “platform + content + management”. The company’s Omo digital business school has three characteristics: 1) convenient talent project construction: support enterprises to customize talent training plans on demand; 2) Multi type and efficient learning experience; 3) Perfect data tracking: one key supervision of team leaders. Omo digital business school collects full subscription fees for enterprise customer platform every year according to the number of heads, years and accounts. The company provides SaaS platform and two public courses. If customers add courses, they need to pay extra. According to the company’s announcement, Omo digital business school has been recognized by customers. So far, it has more than 100 customers and has a good development momentum. It is expected to build the second growth curve of the company.
“One core and two wings” are beginning to show results, and there is more room for growth in the future. Since listing, the company’s “one core and two wings” strategy has become increasingly clear, that is, taking management training as the core and management consulting and equity investment as the two wings. The company continues to focus on entrepreneurs’ business administration education, deeply cultivate enterprise management training, uphold the service concept of “one meter wide and one thousand meters deep”, and enhance customer value through management empowerment. At the same time, the company takes management consulting and equity investment as its two wings. In 2021, the company’s consulting business was standardized and mature, and was introduced to the market, which was recognized by customers. The consulting business achieved an increase of 35.02% in the whole year; The company has set up a private equity investment fund with a capital scale of 200 million yuan. According to the company’s annual report, 21 million yuan has been paid in by the end of 2021, mainly focusing on the pre IPO of student companies, focusing on student companies with stable performance, low valuation, leading technology and great potential. The investment proportion is generally no more than 5%. Subsequent exit will enhance the performance flexibility of the company.
Investment suggestion: it is estimated that the operating revenue of the company from 2022 to 2024 will be 718 million yuan, 897 million yuan and 1.094 billion yuan, with a year-on-year increase of 29.36%, 24.94% and 21.90% respectively; The net profit attributable to the parent company was 222 million yuan, 272 million yuan and 327 million yuan respectively, with a year-on-year increase of 29.78%, 22.72% and 20.10% respectively; EPS is 2.63 yuan, 3.23 yuan and 3.87 yuan respectively, dynamic PE is 17.4 times, 14.2 times and 11.8 times respectively, and dynamic Pb is 3.1 times, 2.6 times and 2.2 times respectively. The company is the first share of A-share market management education and is committed to growing into a world-class effective business school. With the strategy of “one core and two wings”, the company focuses on management training and launches Omo digital business school; The consulting business is committed to standardization, digitization and software, and the consulting business is expected to grow rapidly; Equity investment focuses on the pre IPO of the student company, which helps to enhance the performance flexibility of the company. We are optimistic about the development prospect of the management training industry and the future growth of the company, maintain the “Buy-A” rating, and the target price is 78.85 yuan, corresponding to 30 times of the dynamic PE in 2022.
Risk tip: repeated epidemics cause risks such as slow course sales, intensified industry competition, lower than expected market development, loss of excellent teachers and so on.
