The company's revenue growth was steady and profits fluctuated slightly in the first half of 2022, of which the campus education sector achieved 10% growth, but the online education sector was disturbed by factors such as the suspension of online education enrollment & the demand affected by the local epidemic, and revenue fell by 4%. Looking to the future, we believe that the campus plate is expected to continue steady growth, while the online plate has a strong anti-risk ability and synergy under multiple layouts, and is expected to gradually resume growth.
Revenue growth is steady and profits fluctuate slightly. 1) income and profit: the income of 1H22 Company is 1.274 billion yuan / + 2.9%, the adjusted EBITDA is 590 million yuan / + 1.4%, and the adjusted net profit is 422 million yuan /-4%. The profit end is slightly disturbed by the increase in online business costs and expenses. 2) costs and expenses: 1H22's gross profit margin decreased by 1.1pcts to 57.6%, mainly due to the increase in the cost of online education. The sales / management / financial expenses are RMB 1.10, 2.32, 0.73 million, and the expense rate is 8.52%, 17.99%, 5.62%, which is + 0.63/+1.31/+0.90pcts compared with the same period last year. 3) Cash and liabilities: as of June 30, 2022, the company's book cash and equivalents were 2.69 billion yuan, while short-term and long-term loans were 2.208 billion yuan.
Campus business growth is steady, and online education is disturbed by many factors. 1) Campus education: the company's 1H22 realizes tuition / accommodation fee of RMB 667 million, which is 19.57% compared with the same period last year. Campus education accounts for about 56% of the overall revenue. At present, the campus education section of the company has a total of 10 schools (3 undergraduate, 4 higher vocational, 2 secondary vocational, 1 high school), with a total enrollment of 101636 / + 4.78%, of which undergraduates account for about 57.9%. 2) online education: the company's 1H22 distance education / teacher training / online courses / examination and evaluation income is RMB 4.36, 0.31 and 0.18 million respectively, compared with-5.22%, 19.23% and 17.65%, respectively. Online education accounts for about 43% of total revenue. Among them, the decline in distance education is mainly due to the suspension of online education enrollment in some colleges and universities, and the decline in online courses is mainly due to the decline in the demand for MBA application under the influence of the epidemic.
Looking to the future: campus education is expected to continue to grow steadily, and the layout of multiple plates will increase the company's ability to resist risks.
2022 is the first year after the company completed the strategic transformation. At present, the company has formed seven major business sectors.
Looking forward to the second half of the year, campus education business is stable and is expected to maintain steady growth. While other business sectors are rich in layout, although Aopeng Education is disturbed in the short term, the company actively complements by expanding continuing education business and increasing cooperation with private schools. Duxue Network and Xiaoai Technology are also expected to gradually resume growth as the epidemic control improves and demand recovers. With the diversified layout, the company has a certain anti-risk ability while some of its business is disturbed, and is expected to form a good coordination to create a "recruitment-training-on" integrated Internet + vocational education business development model.
Risk factors: online business development is not as expected; industry policy changes; transfer progress is not as expected; campus expansion progress and new enrollment are not as expected.
Investment suggestion: taking into account the fluctuations in the online education business sector, the company's core net profit forecast for 2022-24 is reduced to 848,920 million yuan (the original forecast is 1.185 million yuan), and the corresponding EPS is 0.19max 0.20 pound 0.22 yuan. With reference to the comparable company's 2022 PE valuation (wind unanimously expected, China Science Education 4x, China Xinhua Education 3.6x, Zhonghui Group 4x), give the company 3.5x PE in 2022, corresponding to the target price of HK $0.81, maintaining a "buy" rating.