Kevin Education (002659): Excluding financial expenses, actual expenses narrowed and advance income increased by nearly 30%

Kevin Education (002659): Excluding financial expenses, actual expenses narrowed and advance income increased by nearly 30%

Investment Highlights Event: The company released its semi-annual report and achieved revenue 1 in 19H1.

5.3 billion, an increase of 70.

79%, net mother formaldehyde 0.

56 ppm, compared with 0 expected last year.

5.2 billion.

Basic yield -0.

11 yuan / share.

Comment: The increase in the number of students leads to high income growth.

19H1 achieved revenue 1.

53 trillion, with an increase of 70.

79%, mainly due to the increase in the number of students, the total number of students in the two schools in the 2017/18 school year was 746, and the total in the 18/19 school year was 1,221.

From the perspective of income structure, 都市夜网 international school business contributes revenue1.

29ppm, accounting for 84%; education and training business contributed 0 revenue.

1.1 billion, accounting for 7%; rental income is 0.

1.3 billion, accounting for 9%.

Advance receipts also increased by nearly 30%.

As of the end of H1, advance receipts amounted to 2.

8.5 billion, an increase of 29.

5%, the enrollment of the new school year on June 30 has not been completed, so the significance of ownership of the advance payment at the end of Q3.

The gross profit margin improved significantly, and the sales and management expense ratios dropped significantly.

19H1 gross profit margin 4.

4%, compared with -22 in the same period last year.

9%, a significant improvement, of which the gross profit margin of international school business1.

78%, education and training business gross margin -49%.

The cost rate during the period was 49.

20%, a decline of 0 every year.

9pct, of which the sales expense ratio is 3.

76% (-3.

3pct); management expense rate 25.

78% (-7.

1pc), which is mainly due to the scale effect brought by the maximization of the school; the financial cost rate is 19.

66% (+9.

4pc), mainly due to the increase in long-term bank borrowings in the second half of 2018.

As of the end of H1, long-term loans amounted to 10.

It is estimated that the acquisition of the three WCC colleges can be terminated for 400 million U.S. dollars, and the financial costs are expected to decrease due to repayment of the remaining balance.

If the impact of financial expenses is eliminated, it may actually narrow.

Return to mother net toxicity 0.

56 million US dollars, a year-on-year increase and loss of 402 million US dollars, mainly due to 19H1 financial expenses increased by 2086 million compared to 18H1.If the impact of the significant increase in financial costs is eliminated, it may actually be significantly narrowed.

Investment suggestion: The performance is basically in line with expectations, and the H1 final advances will increase by nearly 30%. It is expected that the company as a whole will usher in a turning point in performance in 19 years.

Adjusted 2019/20/21 profit forecast to net profit of 0.

01/1.

19/2.

3.5 billion yuan.

It is expected that the overall utilization rate of the two schools will exceed 80% by 2023, and the net profit will be reachable4.

5 billion, after considering the issuance, the market value is about 4.6 billion, which is estimated to be only 10 times. Maintain “Buy” rating.

Risk reminders: International school enrollment is less than expected; brand export business, quality education and training projects are not progressing as expected; the 杭州夜网论坛 new policy of compulsory education has become stricter in the use of overseas teaching materials.