Overview of events
The company released its annual results, with revenue of 761 million as of August 31, 2020, an increase of 12.8% over the same period last year, and an adjusted net profit of 338 million, an increase of 33.3% over the same period last year, in line with the company's positive profit forecast of not less than 30% growth.
Analysis and judgment:
The increase in the number of students and the increase in per capita tuition fees have contributed to the steady growth of the company's income: in terms of the number of students, the total number of students in the group increased by 1.2% year-on-year to 43300 in 2020. Among them, Huali College / Huali Vocational College / Huali technician College increased by 17.4% and 5.6% respectively compared with the same period last year. In terms of per capita fees, the per capita tuition and accommodation fees of the group increased by 11.5% year-on-year to 17600 yuan in 2020. Among them, Huali College / Huali Vocational College / Huali technician College increased by 6.3%, 12.9% and 1.33 million respectively compared with the same period last year. As a result, in terms of revenue, the overall revenue of the group in 2020 increased by 12.8% compared with the same period last year, of which Huali College / Huali Vocational College / Huali technician College increased by 24.9%, 6.6%, 12.0% to 2.33 million yuan, respectively, compared with the same period last year.
The increase in gross profit margin and the decline in the rate of recurrent expenses promote the company's profit growth faster: in terms of gross profit margin, the group gross profit margin increased by 4.9pct to 59.4% in 2020 compared with the same period last year, mainly due to the increase in campus utilization and the increase in per capita tuition fees, of which the utilization rate of Zengcheng / Yunfu campus increased to 93.0% and 24.5% respectively. In terms of expense rate, the group sales / management / financial expense rate decreased in 2020-0.07/0.86/0.13pct to 2.01% 12.86% and 6.71% respectively. As a result, in terms of adjusted results, the group's adjusted net profit increased by 33.3% to 338 million year-on-year in 2020, and the adjusted net interest rate increased by 6.8pct to 44.3% year-on-year.
Investment suggestion
Considering that the growth in the number of people is slightly lower than previously expected, the FY2021/2022 revenue will be adjusted from 9.50 to 1.022 billion yuan, the EPS from 0.35 to 0.32, and the new FY2023 Group revenue will be reduced to 1.158 billion yuan and EPS0.45 yuan, corresponding to FY2021/2022/2023PE8/6/5 times. The main points of the company are as follows: (1) consider that there is more room for gross enrollment rate improvement in Guangdong Province. Therefore, with the expansion of Zengcheng and Yunfu campus, the Jiangmen campus plans to apply for a new college license, and Huali technician College will meet the enrollment growth after changing the academic system. (2) tuition fees are increased by 10% every two years, and undergraduate students in vocational colleges are expected to land; (3) the conversion of independent colleges is accelerated, and the performance is expected to increase after decoupling; (4) there is plenty of cash on hand, and there are expectations of mergers and acquisitions in the future; (5) the net interest rate is likely to improve. Integrated companies have low valuations and high room for growth, maintaining a "buy" rating.
Risk hint
The uncertainty of the impact of the epidemic, systemic risks, increased competition in the industry, and the implementation of the company's strategy did not meet expectations.