The company's revenue in 2022 was 1.55 billion yuan/ +13.6%, and the adjusted net profit of the parent was 380 million yuan/+23%. Among them, the higher education sector grew steadily, with revenue of 1.18 billion yuan/+14.6%, and the number of students enrolled increased 15.9% year-on-year.
In terms of asset-light business, the company's continuing education/education resource export business revenue increased 10.5%/30% year-on-year, and the two-wing business continued to increase. Looking ahead, the education sector is expected to continue to grow steadily as new campuses are put into use, and the asset-light business has broad prospects in the context of the accelerated advancement of the digital economy.
The company's performance grew steadily in 2022, and adjusted net profit increased 23%. 1) Revenue and profit: In 2022, the company achieved revenue of 1.55 billion yuan/ +13.6%, net profit of 3.9 billion yuan/ +28%, and adjusted net profit of 380 million yuan/ +23%. 2) Costs and expenses: The company's gross margin fell 0.3 pct to 43.1%, mainly due to the three school expansion projects completed and put into use one after another, leading to an increase in depreciation expenses and operating expenses. The sales/management expense ratio (excluding equity incentive expenses) was 2.5%/9.6%, respectively, compared to -3 pcts/-1 pct compared to the previous year. The R&D cost rate decreased by 0.7 pct to 2.7% year-on-year due to the fact that several R&D projects carried out earlier have been basically completed. 3) Cash and liabilities: In 2022, capital expenditure was $550 million due to investment in campus expansion and upgrading, and cash and equivalents decreased by $0.5 billion to $1.18 billion at the end of the period. As of December 31, 2022, the company's interest-bearing debt was 2.39 billion yuan, up 10.1% year on year, net debt was 1.20 billion yuan, up 27.8% year on year. The weighted average loan interest rate was 4.75% /-0.17pct, and the asset structure remained healthy.
Gao Jiao: Volume and price have risen sharply, and growth continues. In 2022, the company's higher education business revenue reached 1.18 billion yuan/ +14.6%, of which tuition/accommodation/telecommunication equipment rental revenue was 10.7/1.0/03 billion yuan respectively, +15%/+13%/+92% year on year. The number of students enrolled increased 15.9% year-on-year to 5,2,882. By school, the number of students enrolled in Dalian/Chengdu/Guangdong schools was 18623/20711/13548 respectively, +10.2%/+27.8%/+8.3% over the same period last year.
The total enrollment quota for the 2022/23 academic year was 1,7128 students/ +6.1%. By degree, the number of undergraduate, college, and college upgrades was 11822/846/4460, respectively, +5.6%/-61.5%/+62.1% compared to the same period last year. On the tuition side, the average tuition fee for students enrolled in 2022 increased 4.2% to 23,851 yuan. In terms of capacity, the total campus capacity of the three schools increased 13.9% year-on-year to 5,8060 people. With the increase in tuition and tuition fees, we are optimistic that the company's higher education business will continue to grow rapidly in 2023.
Asset light: The export business of educational resources continues to soar, and the development of continuing education is accelerating. 1) Continuing education and training business: In 2022, the company's continuing education service business achieved revenue of 147 million yuan/+10.5%, and developed specialized IT speech school products. Among them, continuing education revenue was 72 million yuan, and the number of students enrolled decreased by 12% to 8073; 2C short-term training revenue reached 49 million yuan, enrolling 14,770 students; and 2B training business revenue reached 26 million yuan. 2) Education resource export and digital factory business: In 2022, the digital factory revenue was 0.4 million yuan/ -32%, and the education resources business achieved revenue of 180 million yuan/+30%, mainly due to professional co-construction revenue of 80 million yuan/+53%, which achieved rapid growth. The revenue of the smart education platform and experimental training room solution reached 82 million yuan, +19% year on year. In 2022, the company had 10 smart education software products. Based on the original eight major laboratories, 34 training rooms for nine professional directions were planned and developed, forming the top ten professional training rooms. Benefiting from the further expansion of demand for practical training products in colleges and universities under the education interest rate loan policy in 2023, the company's education resource export revenue is expected to increase further.
Risk factors: Risks such as changes in industry policies, company enrollment falling short of expectations, and asset light business expansion falling short of expectations.
Investment advice: Considering the increase in the company's financial expenses, the reduction in one-time government subsidies, and the increase in the tax rate, we lowered the 2023-24 core EPS forecast to 0.66/0.77 yuan (the original forecast was 0.76/0.94 yuan), and added the 2025 core EPS forecast by 0.85 yuan. Combined with comparable companies' 2023 valuations (China Education Holdings 8 times PE, China Kepei 6 times PE, Wind's consistent expectations), the company was given 6 times PE in 2023, corresponding to the target price of HK$4.5, maintaining the “buy” rating.