In the first half of the year, due to the combination of online and metropolitan networks in the online education plate of RTVU, the company's revenue / profits were + 128% and 75% respectively compared with the same period last year, and its performance increased significantly. Looking to the future, after experiencing many mergers and acquisitions in the field of online education in the past two years, the company has made clear the transformation strategy of "Internet +" vocational education platform, and plans to establish an all-channel and full-chain vocational education ecosystem of "Internet +" in the next five years. There is a broad space for long-term development.
The performance exceeded expectations, and 1H21's adjusted net profit reached 440 million yuan / + 75%. 1) income and profit: 1H21 achieved an income of 1.238 billion yuan / + 128.1%, adjusted EBITDA of 584 million yuan / + 69.7%, and adjusted net profit of 440 million yuan / + 75.4%. The substantial growth is mainly due to the merger of the network in December 2020 and the online 100% of RTVU in January 2021. 2) costs and expenses: 1H21 raised its gross profit margin to 58.7% by 2.2pcts, mainly due to the higher gross profit margin of the online education sector (over 60%). The sales / management / financial expenses are RMB 0.99, 2.10 / 59 million, and the expense rate is 7.89%, 16.68%, 4.72%, an increase of + 6.62/+0.41/-2.57pcts compared with the same period last year. 3) Cash and liabilities: as of June 30, 2021, the company's book cash and equivalents were 2.777 billion yuan, while short-term and long-term loans were 1.953 billion yuan.
Equal emphasis is placed on campus education and online education. 1) Campus education: the company's 1H21 realized tuition / accommodation fee of 6.10 / 46 million yuan, which was + 17% and 132% compared with the same period last year, mainly due to the refund of accommodation fee due to the epidemic in the same period last year. At present, the campus education section of the company has a total of 10 schools (3 undergraduate, 4 higher vocational, 2 secondary vocational, 1 high school), with a total of 97002 students / + 14%. Among them, the number of students of Dianchi College / Pais College / Chongqing Vocational College of Applied Technology / Chongqing Vocational College of Telecommunications increased by 26773965 and 205925respectively. The conversion of Dianchi College has been announced by the Ministry of Education, and it is expected that the annual management fee will be saved by 40 million yuan in the future. The transfer of Paisi College of Chongqing Industrial and Commercial University has been approved by the Chongqing Municipal Government and is being submitted to the Ministry of Education for approval and is expected to be completed in 2021. 2) online education: the income of the company's 1H21 distance education / teacher training / online courses is 4.60 / 35 million yuan respectively. At present, the company's online field mainly includes six major platforms: IT training, HSK (Chinese proficiency examination), Aopeng Education (distance education service), Minsheng online (online education and training), Duxue Network (MBA CHINA), Xiaoai Science and Technology (flexible employment platform & human resources SaaS), which has formed a "recruitment-training-on" whole chain training system.
Looking forward to the next 5 years: strategic transformation "Internet +" vocational education platform. The company clearly defined "Internet +".
Vocational education group positioning, with a comprehensive online and offline vocational education business system, to establish a learner-centered high-quality full-education full-chain business model, providing services from enrollment evaluation, teaching, practical training, examinations, studying abroad, employment, entrepreneurship and other services. The implementation of the company's strategy in the future will be divided into three stages: 1) the integration period (2021-22): strengthen the coordination among the existing businesses and improve the construction of the middle and background; 2) the upgrading period (2022-24): adopt the "self-management + partner" model and unite industrial resources to achieve cross-platform and cross-domain cooperation. 3) Open period (after 2024): give full play to the advantages of digital assets, services and links to build "Internet +" vocational education ecology in the cloud.
Risk factors: the progress of conversion is not as expected; the progress of campus expansion and new enrollment is not as expected; industry policy changes.
Investment suggestion: taking into account the consolidation of the online education business and the better-than-expected performance growth, the company's core net profit forecast for 2021-23 is raised to 7.25 million yuan (the original forecast is 6.97 pounds), and the corresponding core EPS is 0.17 pounds 0.21 hundred and twenty-five yuan. Give the company's higher education sector an average valuation of 10 times PE in 2021, corresponding to the target price of HK $1.90, maintaining a "buy" rating.