Overview of events
The total income / main business income / net profit of the company's FY2022H1 group was 1.210, 1036, 345 million yuan respectively, an increase of 30.7%, 31.7%, 17.2% over the same period last year, and the performance exceeded expectations. The interim dividend per share is 0.106 yuan, the dividend yield is 5.2% (1 yuan = 1.1997 Hong Kong dollars), and the dividend ratio is increased from 30% to 50%. At the end of the company, the cash on the account is 920 million yuan.
Analysis and judgment:
Diversified income accounts for 14%, maintaining high growth. The company's other income and gain was 173 million yuan, up 25% from the same period last year, accounting for 14%, mainly from school-enterprise cooperation income brought by training services, logistics income, business layout and industry-education integration; the decline in growth was mainly due to the 13 million yuan in CB income in the same period last year, excluding other business income growth of 38%, maintaining a high level.
Schools in Gansu and Zhengzhou contribute income. The group's main income was 620 million yuan, an increase of 44.2% over the same period last year. The increase in income is mainly due to the steady increase in tuition income and accommodation fee income, as well as the combination of Gansu schools and Zhengzhou schools. According to the split of tuition fees and accommodation fees, the income from tuition fees / accommodation fees in mid-2022 was 944 million yuan respectively, an increase of 32% and 29% over the same period last year.
The continued increase in investment has led to a decline in gross profit margin. FY22H gross profit margin was 40.2%, down 5.2PCT from the same period last year, mainly due to the increase in cost input (the proportion of main business costs increased from 74% to 78%) and an increase of 44%: (1) increase in manpower costs: the company introduced more than 500 high-end talents, the number of teachers with master's degree and above increased by 21% compared with the same period last year, and the number of professional titles of intermediate and above teachers increased significantly, continuing the trend in recent years. (2) the teaching cost increases, especially in the aspects of increasing investment in student activity competition, specialty construction and teaching science and technology reform, private-enterprise cooperation, high-quality employment and so on. (3) the transformation of business environment. (4) depreciation and amortization increased by 44%, mainly due to the consolidation of Gansu schools. In terms of effect, the employment rate of graduates reached 98% last year, which we estimate is higher than the national level of 7PCT.
The net interest rate of fee control contribution increased, and the interest-bearing debt ratio further decreased. Despite the decline in gross profit margin, the company's net profit margin increased by 8.5PCT to 34.5%, mainly due to the control of fees: (1) administrative expenses / income decreased by 0.89PCT to 5.02%, and (2) financing costs / income expenditure decreased by 1.8PCT to 5.65%. However, the company's sales expenses / revenue increased slightly. The group's interest-bearing debt ratio fell 6.1PCT to 31.8%, and short-term interest-bearing debt ratio fell to an all-time low of 24%. The weighted average interest rate on new loans fell 82bp from a year earlier, falling below 5 per cent for the first time.
Investment advice:
We expect that in the future, the company will mainly rely on endogenous growth, and the annual tuition fee is expected to increase by 10% (low tuition fees for new merged schools and higher tuition fees for industry-education integration classes), and the number of students will maintain growth of 3-5%. Combined with the growth of other business income, it is expected to maintain an overall income growth of 15-20%. In the context of the company's continued increase in investment, net profit is expected to maintain a growth rate of 10-15%. Future concerns: (1) after Huazhong and Gansu schools are transferred, the room for enrollment expansion and price increase is expected to be released; (2) Zhengzhou schools also have room for enrollment expansion and price increase; (3) financing costs are expected to further decline.
Taking into account the fact that China News exceeded expectations, the revenue forecast for fiscal year 22-24 was raised from 2.794 million yuan for 2213Universe to 3.097 billion for 222,633, and the net profit forecast for homing was raised from 781 million to 755 million, and the corresponding EPS forecast for fiscal year 22-24 was adjusted from 0.444 to 0.42 to 0.480.55. On April 26, 2022, the closing price of HK $2.43 corresponds to PE of 5Universe 4X (HK $1 = RMB 0.82). It is optimistic about the endogenous growth ability of the company as the leader of applied private higher education. The new vocational education law makes it clear that vocational education and general education have the same important position, which is expected to boost market confidence and maintain the "buy" rating.
Risk hint
The uncertainty under the influence of the epidemic, the pace of expansion is lower than expected, enrollment is lower than expected, existing business quality control risk, systemic risk.