Main points of investment
The company's transformation and development is beginning to show results, maintaining the "buy" rating, with a target price of HK $2. Group 21H1 performed better than expected. Focusing on the vocational education track and centering on "Internet +" vocational education, the company has taken the lead in establishing an integrated ecosystem of campus education + online education, academic qualifications + non-academic qualifications, and post-graduate education from secondary vocational to professional degrees. In the short term, the transformation and development of the company has achieved initial results, and in the long run, systematic development will help the company to optimize operational efficiency and expand the business margin; in addition, the policy end of higher education is relatively stable, and the implementation regulations of the Civil Promotion Law will further affirm vocational education.
It is estimated that the company's FY21-FY23 annual revenue will reach RMB 2.485 billion, and its core net profit will be RMB 1.17 billion, maintaining the "buy" rating and the target price of HK $2, which corresponds to a 2021/2022PE multiple of HK $7.6 times.
Increase in the number of students + online education and promote a substantial increase in income: driven by the consolidation of online education business and the growth of the number of campus education, the company's 21H1 recorded 1.238 billion yuan in revenue, yoy+128.1%. Specifically, the number of students on the campus of the company reached 97000, and yoy+14.3%, led the campus tuition income of the company to + 16.6% to 610 million yuan compared with the same period last year. With the transformation of the company's light assets and the development of online education, its Aopeng Education, Mutu.com, HSK, Aopeng Education, Minsheng online Education, Xiaoai Technology, MBAChina and other platforms contribute 572 million yuan in service income (20H1 is 0), significantly promoting the group's revenue growth.
The number of students has increased steadily, and at the same time, the "Internet +" vocational education group has been built: the number of students in the company's 10 schools has reached 97000, an increase of 12181 over last year. At the same time, the company actively promotes strategic transformation and uses science and technology to carry out the coordinated development of campus education, online academic education services, professional ability enhancement, examination and evaluation, technology platform, human resources and employment, and international education. Among them, Aopeng Education has built more than 1800 learning centers to serve 1.04 million students, and the Duxue Network added about 174000 users that year.
The company's core net profit increased by 75.4%, the gross profit was 727 million yuan compared with the same period last year, an increase of 136.9% compared with the same period last year; the gross profit margin was 58.7%, year-on-year + 2.2pct, mainly due to the high gross profit margin of online education; the core net profit reached 440 million yuan, an increase of 75.4% over the same period last year, and the adjusted net profit rate was 35.6%, year-on-year-10.7pct, mainly due to the high online business expense rate. The company's interest-bearing debt ratio reached 40.16%, 2.24pct lower than in 2020; the company's cash reached 2.8 billion yuan.
Risk tips: 1) changes in China's education policy; 2) the number of qualified teachers hired and retained is not as expected; 3) the number of students enrolled is less than expected; 4) the process of self-construction and acquisition is not as expected; and 5) the change of organizers is not as expected.