Interim results in 2022 are in line with market expectations
The company announced its mid-term results in 2022: its revenue was 740 million yuan, up 24.4% from the same period last year, in line with market expectations; in mid-2022, the adjusted net profit was about 230 million yuan, up 89.5% from the same period last year. Profit growth benefited from the company's optimization of costs and fees, other revenue from government subsidies and the impact of the repurchase of minority shares, in line with the company's Yingxi forecast and market expectations.
Trend of development
The campus has been expanded, and higher education with academic qualifications has increased steadily. In mid-2022, the income of higher education with academic qualifications was 580 million yuan, an increase of 23% over the same period last year. As of June 30, 2022, the number of students in school exceeded 45000, an increase of 16% over the same period last year. The company's average tuition fees for higher education increased by 6% compared with the same period last year, thanks to the school's ability to provide quality majors and attract high-quality students. By the first half of 2022, there were a total of 8 national first-class undergraduate professional construction sites, and the enrollment scores of the three schools all exceeded the provincial control line. At the same time, the number of higher education places in its three schools increased by 22% in the 23 academic year compared with the same period last year, including 6% for undergraduates and 156% for junior college students. During the reporting period, the company added more than 7000 beds, which can accommodate 58000 students, and the current campus utilization rate is 78%. We believe that the campus capacity of the company is sufficient, the enrollment is attractive, and the academic education sector is expected to maintain steady growth, and academic education revenue is expected to grow by 19% in 2022 compared with the same period last year.
Professional co-construction and wisdom education product output model has been verified. The income of educational resources and digital workshop business increased by 40% in mid-2022 compared with the same period last year, of which the export of educational resources increased by 116% year-on-year.
The output of educational resources has become a platform and product: 1) in the cooperation between professional co-construction and industrial colleges, the company carried out 253 co-construction projects with 65 colleges and universities during the reporting period, achieving an income of 36 million yuan, an increase of 78% over the same period last year. The management said it planned to add eight more cooperative schools in the new academic year. 2) the revenue of intelligent education platform and training laboratory products is about 29 million yuan, an increase of 264% over the same period last year. The company has newly launched Neusoft Wisdom Education platform, Neusoft IT practice platform and Neusoft Cloud classroom, which will enable more vocational education learning in colleges and universities through standardization and production. 3) the decline in digital workshop revenue compared with the same period last year is mainly due to the fact that the company has gradually replaced the low gross profit model of offline engineers with online training mode, thus reducing the company's site and labor costs.
The profit level has improved significantly. The company's gross profit margin is 47% in mid-2022, which is higher than that of the same period last year. The increase in gross profit margin is mainly due to the fact that the increase in academic fees is greater than the increase in cost, and the export of educational resources has the characteristics of light assets and high gross profit. The adjusted net profit increased by 89.5% to 230 million yuan compared with the same period last year, and the adjusted net profit margin was 31%, which increased 11ppt compared with the same period last year, thanks to the optimization of the company's management expense rate, R & D expense rate, government subsidy and the company's recovery of minority shares to increase profits.
We expect the adjusted net profit of the company to be 400 million yuan in 2022, an increase of 30% over the same period last year.
Profit forecast and valuation
The profit forecasts for 2022 and 2023 will remain basically unchanged. The current share price corresponds to a price-to-earnings ratio of 6.4 times earnings to 5.0 times earnings in 2023. Maintain an outperform industry rating and a target price of HK $6.60, corresponding to a price-to-earnings ratio of 10 / 8 times 2023, which is 56.4% higher than the current share price.
Risk.
The enrollment is not as expected; the impact of epidemic risk.