Maple Leaf Education achieved revenue of 1.53 billion yuan in fiscal year 20, down 2.3% from the same period last year, with a net profit of 509 million yuan (down 22.2% from the same period last year) and earnings per share of 0.17 yuan. The performance is in line with our expectations. Due to the impact of public health and safety incidents, the company's kindergartens and overseas study trips were suspended, reducing income by about 95 million yuan. In addition, the company also refunded the accommodation fee of 38 million yuan to the students.
Income growth is slowing. Due to the decline in enrollment rate and the growth rate of tuition fees, the company achieved an income of 1.53 billion yuan in fiscal year 20, down 2.3% from the same period last year. Income growth is about 19.8 percentage points lower than in fiscal year 19. In fiscal year 20, the number of students enrolled in K9 (primary and junior high school) increased by 13.2% to 37049 compared with the same period last year, 22.3 percentage points lower than in fiscal year 19. The number of high school students rose 1.5% year-on-year to 8280, 10.8% higher than in fiscal year 19. Tuition income was 1.38 billion yuan, an increase of 4.4% over the same period last year. Average tuition and boarding fees fell 5.6 per cent year-on-year to 30189 yuan. The decline in tuition fees is mainly due to the fact that the growth rate of high school students is lower than that of K9 students with low tuition fees. At the same time, the refund of boarding fees has also led to a decline in average tuition fees and boarding fees. We predict that as public health safety incidents are still prevalent in western countries, parents may take a wait-and-see attitude towards sending their children to study abroad, and the company's income growth may be weak. We expect maple leaf enrollment to reach 51067 in fiscal year 23, with a three-year compound growth rate of 3.8%. We also expect the average tuition fee to grow at a three-year compound annual growth rate of 1.6%, so the tuition income in fiscal year 23 will increase to 16.4 billion yuan, with a three-year compound annual growth rate of 6.1%.
Profit margins are narrowing. The prevalence of public health and safety incidents abroad has also reduced Maple Leaf's business income related to student services in fiscal year 20. Both winter and summer camps were suspended, causing revenue from other businesses to fall 39.7 per cent year-on-year to 152 million yuan. As a result, net profit fell to 33.3% (down 8.36 percentage points from a year earlier). We expect that services such as summer camps and catering will continue to come under pressure in FY21 due to public health and safety incidents, and net profit may fall further to about 29.8%.
Relax the restrictions on related party transactions. As Maple Leaf Education mainly operates schools in the stage of compulsory education, such schools can only choose non-profit, and related party transactions are the only way to obtain profits. According to the reply of the Ministry of Education to the National Committee of the Chinese people's political Consultative Conference (CPPCC) proposal No. 3379 today, legal and compliant related party transactions can still be carried out, and we expect the market's concern that K9 private education listed companies will not be able to obtain school income may be alleviated.
Down to increase holdings. As the public health safety incident may continue to affect the maple leaf student-related service business and the operation of foreign schools, we have lowered our earnings per share forecast for fiscal year 21-22 to 0.22 yuan and 0.26 yuan, respectively. (originally forecast 0.28 yuan and 0.34 yuan) We increased our earnings per share forecast for fiscal year 23 by 0.28 yuan. We lowered our target price from HK $3.14 to HK $2.68, corresponding to an increase of 16.5%. We downgraded our rating to overweight.