Main points of investment

According to the comparable caliber, the main income is + 15.9%, and the total income driven by the diversified development of other businesses is + 24.6%. Thanks to endogenous growth, the company's main FY21 revenue reached 1.497 billion yuan, which was + 15.9% compared with the same period last year (the same below); other income reached 318 million, + 93.1% compared with the same period last year, mainly benefiting from the diversified development of the group's value-added business, of which Kao Pei business income increased by 125.5% to 70 million, and commercial logistics income increased by 99.1% to 110 million yuan. During the period, the company increased school quality construction, increased teaching investment, teaching costs and other year-on-year + 37.4%, resulting in a gross profit margin of-3.1pct to 44.6%. Thanks to effective cost control, the company's net profit during the period reached 592 million yuan, + 22.8% compared with the same period last year.

Under the development of high quality and high efficiency, the gross profit margin and expense rate decreased, and the employment rate was as high as 98%. The number of students enrolled in the 22nd school year increased to 144000. Although the gross profit margin of the group has declined under the high-quality development, the FY21 sales expense rate / administrative expense rate / financing expense rate is + 0.1pct/-1.2pct/+0.7pct, the three rates are-0.4pct, and the fee control is good. The Group has continued to increase investment in running schools, in-depth cooperation with more than 1600 well-known enterprises in the industry, implemented customized training programs for private enterprises around the needs of the country and industry, and opened more than 100 employment classes for famous enterprises. the number of industrial colleges has increased to 30, and the average employment rate of the group has risen to 98% in 2021. In the 202111 2022 academic year, the number of students in the company reached 144000, + 14.4% compared with the same period last year, while the average tuition fee is still lower than that of the same industry and has room for growth.

The debt structure continues to be optimized, and the dividend payout rate of 21H2 is as high as 50%: the company's total funds as of FY21 (including cash, deposits and financial assets) is 1.18 billion yuan, plus the income from tuition and accommodation fees collected in advance for the new academic year after September, the capital reserve may further grow to an all-time high. At the same time, the proportion of the company's short-term interest-bearing liabilities fell to 24.3%, the lowest level in history. In addition, the company further raised the dividend level, with the 21H2 payout rate rising to a high of 50% after the 21H130% dividend yield.

Maintain "prudent overweight" rating: the company's Huazhong and Gansu schools have been successfully converted, Zhengzhou schools and Gansu schools will be fully consolidated at FY22, and the company has further completed the acquisition of minority interests in northeast schools, adding to the deterministic increase in the number of students and tuition fees in the new school year, the company's FY22 performance is expected to continue to expand. Considering that the company is in the period of high-quality development strategy investment, we estimate that the company's main income in 2022-2024 will be 1.966 shock 2.281 billion yuan, and its mother net profit will reach 748 million 904 million yuan. Maintain the "prudent overweight" rating and lower the list price to HK $5.20, which corresponds to 22 PE, which is 6 times that of 23 years.

Risk hints: 1), the change of the rights and interests of the organizers is less than expected; 2), the number of qualified teachers hired and retained is less than expected; 3) the number of recruits is less than expected; 4), the change of China's education policy; 5), the policy risk of VIE structure.