Zhonggong Education (002607) Company Review: Industry Favors Frequently Recommends Vocational Education Training Leaders

Event: According to the announcement of the official website of the Ministry of Education, the number of applicants for national postgraduate entrance examinations will reach 3.41 million in 2020, an increase of 18%.

Opinion: The number of postgraduate candidates continues to rise, and the size of the training market is expected to exceed 10 billion.

The number of graduate candidates has increased year by year since 2015, from 1.65 million in 15 years to 341 in 2020, 深圳养生会所 with a CAGR of 16%, and this year exceeded 3 million for the first time.

In addition, according to data from the Graduate Admissions Information Network, in the past five years, Jiangsu, Sichuan, Fujian, Guangdong and other provinces and cities have doubled the number of graduate candidates.

The highest number of applicants has continued to climb, and the number of admitted students has remained relatively stable. The average number of admissions in the past three years has been around 700,000.

In this context, both offline and online postgraduate training institutions have entered the stage of product upgrade and quality improvement, and introduced more targeted, high value-added products such as through trains, agreement classes, and closed training.

We believe that the number of applicants has continued to increase, and the increase in participation rate and customer unit price is an attempt to promote the scale of the postgraduate training market to exceed the tens of billions.

The short-term impact of institutional reforms has subsided, and the number of recruits for public examinations has rebounded.

2020 National Examination Plan Recruitment 2.

40,000 people, involving 86 central and state organs and 23 directly-affiliated institutions. The number of recruiters increased by 66% over the previous year, and the number of people who passed the qualification examination reached 143.

70,000, the overall recruiting ratio is 60: 1.

As the impact of institutional reforms subsides, the number of recruited candidates for examinations in various provinces is expected to increase, which will benefit the public examination training industry.

Education service companies are expected to be exempt from expectations.

The Ministry of Finance recently issued the Supplementary Law (Draft for Soliciting Opinions), which proposes that education services provided by schools and other educational institutions be exempted from replacement.

The company’s main military non-degree education services, the company and its subordinate units are mostly levied at a simple rate of 3%, without input tax credits.

According to our calculations, the fee payable based on 2018 revenue of USD 6.2 billion was substituted for about 1.

If the amount of tax exemption is US $ 8.6 billion, the income end will increase by about 3%, and net profit will increase by 10% + (assuming that the selling price including tax is unchanged), which will contribute positively to both income and net profit.

Investment suggestion: The number of enrolled candidates for the national examinations has rebounded further in the past 20 years, and the number of candidates for postgraduate entrance examinations has continued to rise. As a leader in the industry, Zhong Gong continued to benefit from the transformation of teachers.

Ignore the impact of exemption for the time being, and maintain the net profit attributable to mothers for 19/20/2117.



9.6 billion, with a budget benefit of zero.



57 yuan / share profit forecast.

The current market value is expected to be 1086 trillion, and the corresponding 20/21 estimate is 44x / 31x. Maintain the “Buy” rating.

Risk reminder: The proportion of classes through agreement increases. If the passing rate is not up to expectations, the refund rate will increase, which will affect the growth of face-to-face training business; the ceiling of the public examination training industry is obvious; the category expansion is less than expected.