Zhonggong Education (002607): The scale of the post-graduate market is expected to widen and the cross-track model is continuously verified

Zhonggong Education (002607): The scale of the post-graduate market is expected to widen and the cross-track model is continuously verified

Event: The Ministry of Education announced that 3.41 million people will be enrolled in the National Graduate Admissions Examination in 2020, adding value over decades.

6%, maintaining double-digit growth for 4 consecutive years.

The employment pressure brought by the declining competitiveness of the undergraduate degree, the number of candidates for postgraduate study continued to increase, and the difficulty of taking exams increased the intention to participate in training.

The expansion of colleges and universities 西安耍耍网 in 1999 led to an increase in the number of fresh graduates in 2003 to 980,000, an increase of 49%.

The CAGR of undergraduate graduates from 2004 to 2018 was 8%, reaching 4.05 million in 2018.

The popularity of higher education has increased the degree of biology at the time of corporate recruitment, and the competitiveness of undergraduates has decreased.

Under the background of increasing employment pressure, more people choose to study.

In 2019, the number of applicants for postgraduate entrance examinations reached 2.9 million, an increase of 21 each year.

8%; 3.41 million people applied for the exam in 2020, and set a new high, increasing by 17 per year.

6%.

At the same time that the number of graduate candidates has continued to increase, the number of students admitted each year has only increased by about 40,000, and the admission rate has increased from 2 in 2016.

9: 1 to 3 in 2019.

9: 1, 2020 will exceed 4: 1.

Increasing the difficulty of examinations will increase the intent to participate in examinations, and promote the company’s continuous increase in the income of graduate examinations.

Benefiting from the expansion of the industry scale, the company’s post-graduate tutoring business continues to grow at a high speed, and the market share will further increase. The company’s cross-track growth logic has been verified.

In 2018, the postgraduate counseling market size was about 4 billion, and the company accounted for about 10%, ranking second.

The training market has the attributes of product supply promotion. The increase of high-quality training companies can bring about rapid growth in the market size. With the increase in the number of graduates and the participation rate, it is expected that the market size will reach 10 billion in 2020 and will exceed 200 in 2025.The company’s post-graduate business in 2019 will likely double its growth rate in recent years. It will be able to maintain a high double-digit growth rate in recent years. It is expected to become the first market share in 2020.verification.
In addition, recent industry policies have been favorable, and the draft of the Supplementary Law has proposed that the non-educational education services that were originally paid at 3% instead be allocated tax-exempt scopes.

We recalculated the company’s 2018 ranking based on the educational surcharge surcharge.

10,000 yuan, if the sales price including tax is unchanged, all exemptions will lead to a 5% increase in 2018 company revenue and a 23% increase in net profit.

Considering that the company pays the tax rate of 3% and 6%, not all conversions are eligible for tax exemption. It is expected that the impact of exempt conversion on the profit side will be about 15%, and the corresponding 2020 forecast net profit will be increased from 25 million to 280,000 yuan.

Company profit forecast and investment rating: As a leader in vocational training, we are optimistic that the company will base its research and development advantages on multi-field development. It is estimated that the company’s net profit for 2019-2021 will be 17/25/34 trillion, and the corresponding EPS is 0.

27/0.

40/0.

56 yuan, corresponding to PE is 65/44/32 times, maintaining the “strongly 佛山桑拿网 recommended” level.

Risk reminder: Participation training rate is lower than expected, higher-than-expected policies, and vicious events in education occur.