Revenue increased by 35% year-on-year, and core net profit + 33%.
The company realized operating income of 1.682 billion yuan, an increase of 34.9% over the same period last year. The income from tuition and accommodation fees was 1.145 billion yuan, accounting for 68.1%, an increase of 36.2% over the same period last year, while the income from supporting services was 536 million yuan, accounting for 31.9%, an increase of 32.1% over the same period last year. The increase in income is mainly due to the increase in the number of students and the increase in the average unit price of supporting services. The gross profit was 742 million yuan, up 36.1% over the same period last year, and the core net profit was 429 million yuan, up 33.1% from the same period last year.
The number of students has increased strongly, and the average tuition fee has increased steadily.
The number of students in the company increased by 32% to 54420 compared with the same period last year. There were 11555 senior high school students, accounting for 21%; 23680 in junior high school, accounting for 44%; 18943 in primary school, accounting for 35%; and international curriculum, accounting for 0.4%. The total student capacity increased by about 27 per cent to 63000 students, and the school utilization rate was about 86 per cent. The average tuition and accommodation fees of the group increased by 8.2% to 21049 yuan. In the 19th academic year, more than 90% of the high school graduates entered the university, and more than 50% of the Guangming Middle School high school graduates were admitted to the first-tier undergraduate universities.
With a two-pronged expansion strategy, the total number of schools reached 12.
As of August 31, 2019, the company has operated 12 high-end private schools: 3 in Dongguan, 1 in Huizhou, 1 in Jieyang, 1 in Liaoning, 2 in Shandong, 2 in Sichuan and 2 in Fujian. Based on a scalable and replicable business model, the company adopts a "two-pronged" expansion strategy, that is, 1) to expand existing schools to increase student capacity, and 2) to open more schools on a self-built and light-asset basis. The total capacity of the school is expected to reach 70000 students by 19pm. If all the land available for expansion is fully utilized, the company's school is expected to have a maximum capacity of more than 140000 students. The company's future expansion is still based on Dawan District, Guangdong Province. At present, the company is preparing to build new schools in Chaozhou and Jiangmen Kaiping, of which Chaozhou School can accommodate up to 8000 people; Jiangmen Kaiping School can accommodate 7500 people at most. The first phase of both schools is expected to begin in the 20pm 21 school year. Guangzhou and Zhaoqing are also preparing for new schools, while Dongguan and Foshan are discussing light assets projects. The new school in preparation is expected to have a total maximum capacity of more than 15500 students.
Maintain the "overweight" rating.
We maintain a forecast of core net profit of 534 million yuan for 20-21 years, an increase of 25% to 22% over the same period last year, and a forecast of 771 million yuan for 22 years, an increase of 18% over the same period last year. Taking into account the smooth progress of the company's new schools, the future performance growth with strong certainty, maintain the "overweight" rating.
Risk hints: the decline of teaching quality, the change of education policy and the strategy of extension expansion are not up to expectations.