China Science Education (01890HK) announced that the number of students enrolled in the 2021 new school year reached 123,000, an increase of 34.2% over the previous year. The main reasons for the sharp increase in the number of students enrolled are: (1) the increase in enrollment quotas for the 2021/2022 academic year; and (2) the expansion of the number of students enrolled due to the acquisition of newly acquired schools, Huaibei Institute of Technology and Ma'anshan University.

The number of students enrolled and tuition fees have been steadily rising, and performance growth can be expected. The enrollment performance of Ma'anshan University and Huaibei Institute of Technology, which were newly acquired by China Science and Technology, was good. The registration rate reached 95.5%, driving the overall number of undergraduate students to 55,000, accounting for 44.7% of the total number of students enrolled. The number of students enrolled at the Guangdong Institute of Technology reached about 89,000, an increase of 21.6% over the previous year; the number of students enrolled in Zhaoqing School exceeded 90,000, an increase of 9.7% over the previous year; the number of students enrolled at the Harbin Petroleum Institute reached about 12,000, an increase of 21.1% over the previous year. The overall number of students enrolled and newly enrolled students reached a new high. At the same time, the undergraduate fee standard for the 2021 academic year of Chinese science and education was raised by 10%, and the tuition fee standards for adult education and middle school vocational education in schools were raised by 10%. The sharp increase in the number of students enrolled and the increase in tuition fees are expected to lay a good foundation for future performance growth.

The policy encourages the high-quality development of modern vocational education. Recently, the Central Office and the State Administration issued “Opinions on Promoting the High-Quality Development of Modern Vocational Education”. The goal is that the modern vocational education system will be basically completed by 2025, and the enrollment scale for undergraduate vocational education will not be less than 10% of the enrollment scale for higher vocational education. Opinions suggest encouraging listed companies and leading enterprises in the industry to organize vocational education, and encouraging all types of enterprises to participate in organizing vocational education in accordance with law. Encourage vocational schools to cooperate with social capital to build vocational education infrastructure and training bases, and jointly build shared public training bases. It requires optimizing the supply structure of vocational education, prioritizing the development of a number of emerging majors required by industries such as advanced manufacturing, new energy, new materials, modern agriculture, modern information technology, biotechnology, artificial intelligence, etc., and speeding up the construction of a number of specialties that are in short supply, such as preschool, nursing, rehabilitation, and home economics. It is required that the expenditure structure be optimized, and that additional education funding be skewed towards vocational education. The introduction of the new policy will help ease market concerns about policy orientation and boost market confidence in the vocational education sector. Investment suggestions: As of June 30, 2021, China's Kepei's medium-term earnings were about RMB 634 million (same unit below), up 51.4% year on year; core net profit was about 420 million yuan, up 35.0% year on year, and performance was steady. The policy encourages high-quality development of modern vocational education, and is expected to drive valuation repairs in the vocational education sector and maintain recommendations.