Event description

FY2022H1 realized income / homing net profit / homing adjusted net profit of RMB 2.51 million, up 48.4% and 52.5% respectively over the same period last year. The interim dividend per share is HK8.4 cents, with a dividend yield of 30% and a dividend yield of 3%. Cash and equivalents are 900 million yuan.

Analysis and judgment:

With the merger and acquisition of Guangdong technical school, the number of students increased by 22.3% to 76300 compared with the same period last year. The income of higher education / secondary vocational / non-academic vocational education is 7050.85 million yuan, an increase of 33%, 695% and 160%. From the perspective of sub-schools: (1) the number of students in Chinese Business College is about 26700, an increase of about 6% over the same period last year; (2) the number of students in Chinese Vocational College is about 17200, an increase of 29% over the same period last year; (3) the number of students in Urban Vocational College in the middle of 2022 is 15400, an increase of 11% over the same period last year; (4) the number of students in Sichuan Urban technician College is 11000, an increase of 28% over the same period last year. (5) the number of students enrolled in overseas schools (GBCA,EIA and EIS) is 800,20% lower than the same period last year; (6) East China Technical School also contributed 5200 students.

Tuition fees continue to rise. (1) the average tuition fee for general undergraduate courses in Huashang College has increased from 28000-43800 yuan to 28000-48000 yuan, and the prices of some courses have been raised. The average fee for upgrading this course has increased from 27000-33000 yuan to 28000-37000 yuan, with a price increase of more than 3%. (2) the average tuition fee for general majors in Chinese business vocational college has increased from 16500-28000 yuan to 17000-30,800 yuan, with a price increase of more than 3%. (3) the average tuition fees of overseas schools remain at 3500-26000 yuan.

The gross margin was flat and the increase in the expense rate led to a reduction in the adjusted net interest rate by 4PCT to 32 per cent. The group's gross profit margin was flat to 50%. The expense rate increased from 5.9PCT to 20.9%, and the increase in sales expense rate was mainly due to the increase in technicians and higher vocational enrollment expenses; the increase in administrative expenditure rate was mainly due to the increase in R & D investment in new business, but it is expected to decline in the second half of the year. Capital expenditure in the first half of the year was 250 million yuan, and the weighted average lending rate was 5.3%.

Investment advice:

We analyze that: (1) in the short term, the net interest rate in the second half of the year is expected to be better than that in the first half of the year, mainly due to more contribution from non-academic vocational education and more investment in R & D in the first half of the year. (2) the integration of industry and education and social training are expected to become the next growth point of the company in the future.

The annual income of FY22/23/24 is 1.652 million, the net profit of home is 7.79936 million, and the corresponding EPS of FY22-24 is 0.56,0.73 and 0.87, respectively. The closing price of PE on May 3, 2022 corresponds to 4x3, 3X (note: HK $1 = RMB0.84).

Risk hint

Vocational education business enrollment is lower than expected; price increase is lower than expected; systemic risk.