The acquisition of CIS, the largest international school in Singapore, has taken shape in the Asia-Pacific region: the company has completed the layout of 12 regions, including ten regions in China, overseas Asia-Pacific region and North America region. The acquisition of Singapore's CIS (Canadian International School) will be Maple Leaf's flagship school in Southeast Asia, and CIS has registered trademarks in Thailand, Vietnam and Myanmar. CIS offers IB courses from kindergarten to high school. The school has two campuses, one of which has a land use life of 30 years and a leased campus with a total capacity of more than 4000. The current utilization rate is 81%. After the acquisition of CIS, 30% of the company's revenue will come from overseas.
The acquisition thickened the performance and maintained a healthy financial position: the acquisition totaled S $680 million, of which S $440 million was for equity acquisitions and S $237 million for debt repayment. The acquisition will take place in two stages, with the first acquisition of a 90 per cent stake and debt repayment, and a second 10 per cent stake will be acquired in July 2022. The purchase price is 13.23 times EV/EBITDA, and the 2020 PE, including taxes and loan interest, is no more than 18 times. The acquisition company is financed through bank loans and is still in a healthy financial position with sufficient cash in the account. Revenue from the acquisition was 118 million Singapore dollars (600 million yuan), with a net profit of 2060 million Singapore dollars (105 million yuan), with a compound growth rate of 40.8 percent over the past three years. The completion of the acquisition is expected to boost the company's net profit by about 20 per cent in fiscal 2021.
Maintain the "buy" rating, maintain the target price of HK $3.80, and move steadily towards the goal of 110000 people in the sixth five-year Plan: the company has three international schools in South Australia, Malaysia and Singapore in the Asia-Pacific region, and the basic layout of the Asia-Pacific region has been completed. in the future, the company will cooperate with the school curriculum system at home and abroad to enhance the competitiveness of Maple Leaf School. And through domestic light assets export + overseas mergers and acquisitions to achieve the company's sixth five-year Plan of 100000 domestic + 10,000 overseas student size planning goal. The epidemic has a certain impact on the company's service business income in fiscal year 2020, but the Ministry of Education believes that the impact of the epidemic will only be a short-term situation. At present, primary and secondary schools in more than 20 provinces have resumed offline teaching, and the company's long-term growth logic remains unchanged. We adjust our profit forecasts and expect the company's fiscal year 2020-2022 revenue to be 16.37,25.05 and 2.761 billion yuan respectively (the same below), an increase of 4.2%, 53.0% and 10.2% respectively over the same period last year. The adjusted net profit was 6.8,9.1 and 1.02 billion yuan respectively, down 1.7%, 33.3% and 12.6% respectively. Maintain the company's "buy" rating, maintain the target price of HK $3.80, corresponding to the 2020-2022 fiscal year PE is 16, 12, 10 times.
Risk hints: 1) the change of national education policy; 2) the expansion process of company acquisition and self-construction is not up to expectations; 3) the decline of students' and parents' satisfaction with teaching quality; 4) the policy risk of VIE structure.