Incident: The company released the FY23H1 financial report, achieving operating income of 2,775 million yuan, an increase of 18.0% over the previous year, Guimu's net profit of 977 million yuan, a year-on-year decrease of 16.4%, and adjusted net profit of 1,045 million yuan, an increase of 15.1% over the previous year.
The performance was in line with expectations. The decline in net profit of FY23H1 is mainly due to FY22H1 confirming the fair value income of convertible bonds of 318 million yuan, but since convertible bonds have already been redeemed in the current period, no such income has been confirmed. The overall performance was in line with expectations, and endogenous growth was relatively steady.
The higher education sector is growing steadily, and the number of students enrolled has reached a record high. By business sector, FY23H1 higher vocational education revenue increased 20.6% year on year to 2,348 million yuan, accounting for 85% of the company's overall revenue; the secondary vocational education sector's revenue was about 320 million yuan, down 3.0% year on year, accounting for 12% of total revenue. Mainly due to the impact of the epidemic on enrollment performance, the number of new students has not fully recovered; revenue from the international education sector increased 44.6% year on year to 107 million yuan, mainly due to the increase in the number of new students enrolled after entry restrictions were lifted. As of FY23H1, the company has a total of 12 universities and professional colleges in China and 2 overseas schools. The overall number of students enrolled increased 10.25% year-on-year to 340,000. The size of the higher vocational education division was about 286,900, an increase of 14.58% over the previous year, and the number of students enrolled in international education was 0.32 million, an increase of 15.0% over the previous year.
The allotment raised HK$1.6 billion to support epitaxial endogenesis and open up new growth points. The company announced in January that a new round of placement of 147 million shares, equivalent to 6.17% of the total share capital before the placement, was HK$1,094 per share, with net proceeds of approximately HK$1.6 billion. It plans to expand the university network (including campus development and potential mergers and acquisitions) and working capital use within 12 months. This placement will help expand the company's business layout and provide new growth points. If the extension mergers and acquisitions restart to dispel the market's pessimistic expectations of mergers and acquisitions, the valuation is expected to continue to recover.
Profit forecast: The company's FY23-25 operating income is estimated to be 56.20/64.51/7.2446 billion yuan respectively, and net profit of the mother is 21.06/24.42/2,737 billion yuan respectively, and CAGR +14%, maintaining the “buy” rating.
Risk warning: risk of asset impairment; student quota growth falls short of expectations; mergers and acquisitions fall short of expectations