Report guide
The company's revenue and profits have stabilized and reversed, and there is a lot of room for repair at a low valuation. The rapid layout of the domestic light asset model is likely to achieve a 2.5-fold increase in the number of students in five years; another child of high-quality overseas mergers and acquisitions, the collaborative creation of BC+AP+IB Maple Leaf World curriculum system, high-quality word of mouth to accelerate a new round of expansion of the sixth five-year Plan.
Main points of investment
More than expected factors: the merger and acquisition of CIS work together to create a reputation, and the sixth five-year Plan is expected to achieve a 2.5-fold increase in the number of students. The market to Maple Leaf Education stays in the popularity of the international education brand reputation, the number of students lack of new growth point, but we think: 1) in 2020, the acquisition of top K12 international school CIS to Singapore radiation Southeast Asian market, with the coordinated promotion of high-quality overseas assets, the company will most likely gain high-quality reputation by virtue of BC+AP+IB world curriculum. At present, the first graduate admission results of Maple Leaf World School pilot campus are outstanding. 2) the company announced the sixth five-year Plan, which plans to form the strategic layout of "10 domestic regions, 2 overseas regions of North America and Asia-Pacific", through the progressive pyramid structure of young, small, primary and high levels in the region, to achieve a complete ecology of self-sufficiency. According to our estimation, the probability of achieving 110000 students' coverage in the sixth five-year Plan is high, and the performance growth is worth looking forward to.
Beyond the expected path: to create the global map of Maple Leaf World School "10: 2". 1) running schools in China: relying on Maple Leaf brand and mature school experience, focusing on light assets cooperation and supplemented by mergers and acquisitions to achieve rapid expansion, break even in the first year of the new school; 2) overseas schools: since 2015, the company has actively laid out overseas markets to open schools in Canada and Australia, successively acquired Imperial College and CIS, and in the future, it will focus on mergers and acquisitions of high-quality international schools + lieutenant colonels of large schools. The net profit in fiscal year 2021 is expected to return to a growth rate of more than 25%, creating a global map of the Maple Leaf World School, covering 110000 students at home and abroad in five years.
Catalyst: autumn enrollment, world school curriculum harvest high-quality reputation, the sixth five-year Plan to promote the landing.
Profit forecast and valuation: the company's revenue in the 2020-2022 fiscal year is expected to increase by 3.84%, 68.42%, 17.28% to 1.63, 2.75, 3.22 billion yuan, with a net profit of 6.40, 8.10, and 982 million yuan, up-2.6 percent, 26.63, and 21.27 percent, corresponding to an PE valuation of 12.41, 9.80, 8.08 times. We believe that with the coordination of high-quality overseas M & An assets and the promotion of the sixth five-year Plan, the net profit in fiscal year 2021 will return to more than 25 per cent growth, and the valuation will be closer to that of the industry, with a target price of HK $5.14 and a "buy" rating for the first time.
Risk hints: the impact of COVID-19 's epidemic exceeds expectations, the policy risk of VIE structure, and the risk of school expansion and enrollment falling short of expectations.