In the 21st academic year, the total number of students in Tianli school network increased by 45% compared with the same period last year, of which 49000 in self-owned schools and 8000 in trusteeship schools increased by 39% and 90% respectively.
On September 10, the company announced that the enrollment of K12 schools in the school network was about 56582, an increase of about 44.5 percent over the same period last year, including about 48773 students from self-owned schools and 7809 students from entrusted schools, an increase of about 39.2 percent and 90.1 percent, respectively.
The increase in enrollment is mainly due to efforts to expand the school network and improve the utilization rate of schools. The company will continue to strategically expand the school network and expand its geographical coverage in China's second-and third-tier cities in order to become an innovator and leader in China's basic education industry. The company will also continue to attract and reserve talented teachers and improve training courses to maintain competitiveness.
We expect that the enrollment performance of the first-year schools such as Rizhao and Dongying in Shandong and Yichun in Jiangxi will be outstanding, while the enrollment of the first-year schools in Chengdu and Jiange in Sichuan will continue to be strong, and all the new schools in the second year will make progress compared with the first year.
According to the official microblog of Fumian District of Yulin, on September 7, the company signed a contract for the Yulin School Project in Guangxi, with a total investment of about 550 million yuan. Yulin Tianli International School is the first K12 school of Tianli Education in Guangxi, with a design size of 5300 people.
The official microblog shows that, as a supplement to public education, the establishment of Yulin Tianli International School will help to attract outstanding teachers and students from Fumian District and Yulin, and promote the overall improvement of the quality of education in Fumian District. It is conducive to reducing the financial expenditure pressure of the government running a school, alleviating the shortage of public places in Fumian District, improving urban public facilities in Fumian District and promoting the process of urban development in Fumian District.
Tianli growth logic in-depth verification, growth rhythm is clear and clear. The policy aims to standardize the development of private schools, create a fair and healthy environment for running schools, and prevent some organizers from illegally occupying and diverting funds and resources for running schools.
We believe that quality education resources will still have strong attraction and bargaining power in the medium to long term.
Maintain earnings forecasts and give buy ratings
Tianli effectively enriches the local education supply by virtue of its own school-running experience, and improves the operational efficiency with the help of the unique flexible advantages of the private sector; on the other hand, it will effectively reduce the pressure on local finance, and most local governments across the country adopt a positive and welcoming attitude towards private education. We are always optimistic about the Tianli model and recognize its remote output and replication of high-quality educational resources. At present, the policy has not been finally implemented, but it can guide the development of high-quality private education or its long-term direction according to local conditions. Tianli is currently in the stage of rapid growth, and we need to pay more attention to the growth of income and students. With the gradual release of the mature performance of the school, we expect the annual net profit of Tianli FY20-21 to be RMB 390 million and 530 million respectively, corresponding to 36xPE and 26xPE respectively.
Risk hints: the implementation regulations of the people's Promotion Law have not yet landed; the enrollment of schools in Guangxi is not as expected; the loss of core executives; and fierce market competition.