Maple Leaf Education reported revenue of 1.53 billion yuan in fiscal year 20 (up to the end of August), down 2.7 percent from the same period last year, and adjusted net profit of 505 million yuan, down 23.1 percent from the same period last year, lower than we expected. This is due to the significant impact of the COVID-19 epidemic on enrollment.
As of October 15, the total number of students enrolled in 20max for the 21 academic year increased by 6.8% year-on-year, with the number of new high school students unchanged. We believe that the increase in enrollment is moderate and expect competition in the Kmuri 12 international school market to intensify.
As outbreaks in overseas areas are still not under control and it may take some time for the effectiveness of the vaccine to become apparent, we are conservative about the growth of Maple Leaf overseas schools.
Due to the slowdown in the growth of the number of students, we downgraded the shares to "hold" and the new discounted cash flow is priced at HK $2.3.
The annual performance was lower than expected due to the major impact of the epidemic.
Maple Leaf's revenue for the 20 fiscal year (up to the end of August) was 1.53 billion yuan, down 2.7% from the same period last year, which was lower than we expected, mainly because the epidemic had a serious impact on the growth of the number of students. In fiscal year 20, the income of high, middle and primary schools increased by 2.0%, 19.7% and 7.1% respectively compared with the same period last year, while the income of foreign children's schools, preschool and other services decreased by 37.4%, 12.6% and 39.7%, respectively. Overall enrollment in fiscal year 20 increased by 10.6% year-on-year, but the average tuition per student fell by 10.2% year-on-year. As a result of the acquisition of Emperor International Education in Malaysia and the Canadian International School in Singapore, the company's administrative expenses increased and its operating profit margin fell 2.1 percentage points in fiscal 20. Maple Leaf's adjusted net profit for fiscal year 20 was 505 million yuan, down 23.1% from the same period last year, which was lower than we expected. Maple Leaf did not announce a dividend for fiscal year 20 because the company wanted to retain cash for large mergers and acquisitions. Due to the outbreak of COVID-19 's epidemic, Maple Leaf cancelled its summer and winter camps and refunded some of its tuition and boarding fees. These measures have reduced revenue by about 133 million yuan.
The growth outlook for FY21 is moderate.
In September 2020, Maple Leaf opened six new schools in Inner Mongolia, Shandong, Liaoning and Hubei, four of which are model schools with light assets. As of October 15, the total number of students enrolled in the 21st academic year in 20amp was 44338, up 6.8% from a year earlier, of which 2000 were high school freshmen, unchanged from the same period a year earlier. The internal enrollment rate from junior high school to senior high school is about 80%. We believe that the increase in enrollment is moderate and expect competition in the Kmuri 12 international school market to intensify. We now expect revenue to grow by 35.9% in fiscal year 21, with 30% growth in the consolidated balance sheet of Canadian International Schools and 5.9% endogenous growth. As of August 2020, Maple Leaf had collected 1.51 billion yuan in advance tuition fees, of which 84 per cent came from domestic schools and 15 per cent from overseas schools. As outbreaks in overseas regions are not yet under control and it may take some time for the effectiveness of the vaccine to become apparent, we are conservative about the growth of its overseas schools in the 2020 Universe 21 school year. Maple Leaf plans to increase tuition fees by 5-8% a year over the next few years. According to Maple Leaf's sixth five-year plan, total enrollment is expected to reach 110000 by the 2024 Universe 25 academic year (45600 at the end of the 2019 Universe), with 100000 Chinese students and 10, 000 overseas students.
Downgraded to hold, the new discounted cash flow is priced at HK $2.3. We lowered our net profit forecasts for fiscal year 21-22 by 5.6% and 9.3%, respectively, to reflect lower-than-expected revenue growth. Positive catalysts include: 1) improved school utilization and capacity expansion; 2) the company will expand in the future through the light asset model. Risk factors: 1) the impact of the COVID-19 epidemic is greater than expected; 2) the new government policy has an impact on the industry