Overview of events
In fiscal year 2021, the group's realized income / adjusted income / adjusted net profit of homing was RMB 2259, 2643, 1.435 billion respectively, an increase of 11%, 10% and 38% respectively over the same period last year, in line with expectations, and no dividend was paid in the current fiscal year. Among them, the income adjustment item is to add back the school income of K9. According to the requirements of the Law on the Promotion of the people, K9 will no longer be included in the financial statements of listed companies from this fiscal year, but still belong to the assets of listed companies; the net profit adjustment items are: 1) add back 24 million yuan in share-based salary expenses (29 million yuan in fiscal year 2020) 2) add back 38 million yuan of additional depreciation and amortization caused by the temporary fair value adjustment of identifiable assets of Hunan Institute of Foreign Economics, Bowang High School, Stanford International University and Shandong Talent College (34 million yuan in fiscal year 2020); 3) minus government subsidy of 35 million yuan (16 million yuan in fiscal year 2020) 4) minus the change in the fair value of convertible bonds by 460 million yuan (plus 790 million yuan in 2020); 5) add back the one-time loss of 1.042 billion yuan recognized under the newly promulgated implementation regulations.
Analysis and judgment:
In fiscal year 2021, the income of K12 / university was 2.35 billion yuan, an increase of-13.42%, 14.95%, and a gross profit margin of 33.92%, 71.1%, respectively, an increase of-10.88%/6.78PCT. Other income / adjusted other income was 0.22 million yuan respectively, an increase of 5.85% and 47.85% over the same period last year, mainly for government subsidies.
From a split point of view, we estimate that (1) the undergraduate / junior college tuition of Hunan Institute of Foreign Economics has increased by 60% 45% to 24,000 yuan, the number of students has increased by 35% to 37400, the net profit has increased by 45% to 375 million yuan, and the net profit has increased more than expected. (2) the income of Shandong Talent College increased by 33% to 600 million yuan, the tuition of this / junior college increased by 19%, 25% to 19,000,000 yuan, and the number of students increased by 8%. The net profit is about 300 million yuan; (3) the income / net profit of Stanford University is 123 million yuan. After two years, the integrated net interest rate reached 32%.
Because K9 cannot merge the table, it brings an impairment of 1.042 billion. Previously, K9 accounted for less than 15 per cent of revenue and less than 10 per cent of profits. In the future, three K9 schools plan to transfer to higher vocational education, and will increase investment in preparation for undergraduate promotion.
In fiscal year 2021, the gross profit margin of the group was 67.2%, an increase of 5.5PCT over the same period last year, an adjusted gross profit margin of 66.9%, an increase of 3.7 26.5PCT over the same period last year, and a net profit rate of 36.5%, an increase of PCT over the same period last year, with an adjusted net profit rate of 54.3% and an increase of 11.1% over the same period last year, mainly from the improvement of gross profit margin and expense rate. In terms of expense rate, (1) in fiscal year 2021, sales expenses (excluding K9) / sales expenses (including K9) was RMB 0.41 billion, down 11.84% and 10.5% compared with the same period last year, and the sales expense rate decreased from 0.48PCT/0.36PCT to 1.82% and 1.6%, mainly from cost control. (2) the administrative expenses (excluding K9) / administrative expenses (including K9) is 1.95 million yuan, down 2.63% and 1.39% compared with the same period last year, and the expense rate is reduced from 1.22PCT/1.00PCT to 8.63% and 8.92% respectively. (3) the financial expense is 53 million yuan, and the financial expense rate is reduced by 2PCT to 2%, mainly due to the reduction of exchange losses and interest expenses.
Investment suggestion
According to our analysis, the future growth space lies in: (1) it is expected that the number of talents in Zheng, industry and commerce and Shandong will no longer increase significantly in the future. Hunan's foreign-related growth comes from the new campus enrollment; (2) Stanford still has room for tuition fee growth; (3) three K9 schools plan to convert to higher vocational education and are currently waiting for the final round of approval, and plan to increase investment in the next five years, and other K9 schools will devote themselves to higher vocational or secondary vocational contribution. It is estimated that the endogenous income in fiscal year 22apace 23 will increase by 8-10%, of which the number of students will increase by 3-4%, tuition fees will contribute 5-7%, and the net profit of returning to the mother will increase by more than 20%. It is estimated that the CAPEX in fiscal year 22 will be 600-800 million yuan.
Considering the effect of divestiture of K9, the annual income of FY22-23 is reduced from 2.973 million yuan to 2.476 trillion yuan, the adjusted return net profit is adjusted from 1.604 million yuan to 1,555.812 million yuan, and the new 24-year income / adjusted return net profit is 2.9162,078 million yuan, corresponding to 0.43 EPS, 0.50.58 yuan respectively. On December 3, 2021, the closing price of HK $3.08 corresponds to a PE of 6x5max 4X (HK $1 = RMB0.82), maintaining a "buy" rating.
Risk hint
The risk of adjustment of national regulations and policies, the risk of aggravating market competition, the risk that the progress of acquisition and expansion is not as expected, and systemic risk.