Incident Overview
Achieved revenue/adjusted net profit for the first half of 2021 was $231/99 million, down 40%/31% year on year, and performance fell short of expectations. 2021H1's gross margin increased 14.3 PCT to 60.6% year over year; sales expense ratio decreased 1.3 PCT to 4.5% year over year, and management expense ratio increased 16 PCT to 26% year over year.
Analytical judgment:
The higher education business is growing steadily and contributing to core performance. The revenue of the 2021H1 higher education business was 212 million yuan, an increase of 13% over the previous year. On the one hand, the number of students enrolled increased 19% year on year to 17,700, of which 4,700 new undergraduate students were enrolled in the 20/21 academic year. On the other hand, the average tuition fee for the 21/22 academic year of Nanjing University of Communication is expected to remain around 16,000 yuan, mainly due to higher tuition fees than the industry and future independent pricing trends, but considering that the company's application ratio is higher than that of the industry and that there is an independent pricing trend in the future, it is expected to be gradually realized in the future Tuition fees are 20,000 to 30,000 yuan per person. Furthermore, the company acquired the Olympic Sports Academy in June this year, and the number of students enrolled is expected to gradually expand from the current 3,000 to 11,000.
The first half of art exam training was a low season, and delivery of the film and television business was slow in the first half of the year. The company completed the merger with Mizumuyuan in April of this year. The 2021H1 art exam training revenue was 15.17 million yuan, and the training period for the first half of the year was limited, but the company's contract debt increased from 5.1 million yuan in the same period last year to 138.9 million yuan, mainly advance payments from Shuimuyuan students. The 2021H1 film and television production revenue was 4.16 million yuan, down 98% from the previous year, but the company's past reserves of many TV series and movies are expected to confirm part of the revenue in the second half of the year to make up for the gap in the first half of the year.
Investment advice:
Considering the succession of newly acquired schools, it is estimated that the Group's FY2021-2023 revenue will be lowered from 11.55/1458/1,777 million yuan to 1,034/1388/1,713 million yuan, and adjusted net profit from 419/524/639 million yuan to 385/499/613 million yuan. Considering that stock prices have reacted more pessimistic expectations, the “buy” rating will be maintained.
Risk warning: Market competition increases risks, policy change risks, integration results fall short of expectations, systemic risks.