Neusoft Education released its 2022 results. In 2022, the company's revenue was 1.55 billion yuan, up 13.6% year on year; gross profit was 667 million yuan, up 12.7% year on year; gross profit margin was 43.1%, down 0.3 pct year on year; net profit of 385 million yuan, up 35.6% year on year; adjusted net profit of 381 million yuan, up 23.04% year on year; adjusted net interest rate of 24.6%, up 0.5pct year on year.
Brief review and investment advice:
1. 2022 revenue of 1.55 billion yuan, a year-on-year increase of 13.6%
(1) Revenue from the “Two Wings in One” business: The company's business revenue in 2022 was: ① full-time higher education revenue was 1.18 billion yuan, up 14.6% year on year, accounting for 75.9%; ② Continuing education revenue was 150 million yuan, up 10.5% year on year, accounting for 9.5%, of which 2C training business revenue was about 49 million yuan, and 2B training fee project revenue was about 26 million yuan; ③ revenue from education resources and digital factory revenue was 230 million yuan, up 10.4% year on year, accounting for 14.6%, of which education resources business revenue was 180 million yuan, accounting for 14.6%, of which the education resources business revenue was 180 million yuan, accounting for 14.6% The year-on-year increase was 30.1%, accounting for 11.8%; the digital factory business revenue was 0.4 billion yuan, a year-on-year decrease of 32.0%, accounting for 2.9%. The educational resources business grew rapidly. In 2022, the company cooperated with 69 colleges and universities in professional co-construction or industrial colleges. Among them, 33 vocational colleges were built, nearly 323 projects were built, the School of Professional Co-Construction and Industry earned about 80 million yuan in 2022, and smart education platforms, teaching content, and laboratory solutions earned about 100 million yuan.
(2) Number of students enrolled in the company's full-time higher education by the end of '22, the total number of students enrolled in the company's full-time higher education was 530,000, an increase of 15.9% over the previous year. Among them, the number of students enrolled in Dalian, Chengdu, and Guangdong schools at the end of '22 was 19,000, 21,000, and 14,000 respectively, up 10.2%, 27.8%, and 8.3%, respectively.
(3) Number of places: The 2022/2023 academic year increased 987 places compared to the 2021/2022 academic year, with an overall increase of 6.1%. Among them, the increase in special programs was the most significant, reaching 62.1%.
(4) School capacity and utilization rate: As of December 31, 2022, Dalian University expanded its capacity by 2,082 to 24,525, Chengdu University expanded its capacity by 1,018 to 17,888, and Guangdong University's campus capacity was 15,647.
The utilization rates of the three universities were 75.9%/115.8%/86.6% respectively. Chengdu and Guangdong University were well utilized.
2. The cost rate for the period improved year over year. ① Sales expenses ratio: The year-on-year decrease of 0.3 pct to 2.5%, and sales expenses increased 1.05% to 39 million yuan, mainly because the company continued to develop the two-wing market. ② Administrative expenses rate: year-on-year decrease of 1.0pct to 9.6%, and administrative expenses increased 2.53% to 148 million yuan. ③ R & D cost rate:
The year-on-year decrease was 0.7pct to 2.7%, and R&D expenses were reduced by 9.97% to 142 million yuan, mainly because several R&D projects carried out by the company in the early stages have been basically completed. We determined that the increase in the company's revenue led to a decrease in the expense rate.
3. Company business plan:
The three universities insisted on improving quality and cultivating excellence and consolidating their leading positions in the industry. ① The company will further strengthen its foundation, develop its advantages, maintain and continuously improve the professional quality, curriculum quality and comprehensive strength of its three universities, consolidate its leading position in the private education industry, and achieve private leadership and national management competition; ② plans to use the three universities as model institutions that implement the Neusoft education development concept and implement Neusoft education resources and services, enhance the brand influence of Neusoft Education, and rely on their practical experience to continuously iterate and upgrade education products and services, laying a solid foundation and setting a benchmark for cooperation with other institutions.
Increase investment in R&D to save strength for the company's sustainable development and education. The company always adheres to the “education+technology” R&D strategy and uses digital technology to empower the high-quality development of smart education; at the same time, it continuously increases investment in R&D of educational resource products, strengthens research and development methods and key technologies, iteratively upgrades the smart education platform, enriches and perfects innovative products for digital talent training, creates a comprehensive, multi-level and integrated education service service platform, enhances the technical content and appeal of our education resource products, and supports the development of integrated two-wing business.
Further improve the quality of 4S services and cultivate more digital talents for the digital economy. In the field of exporting educational resources, the company will improve the industrial college co-construction plan based on the 4S service model, with integrated platforms, specialized software, standardized content and integrated data to promote the large-scale development of the School of Industry, improve delivery quality and efficiency, and establish the brand of Neusoft School of Industry. In the field of continuing education services, the company will continue to expand its business scale, improve the quality of training services, and create a characteristic continuing education model with online and offline integration and domestic and international interaction.
Update profit forecasts and valuations. We forecast that the company's main business revenue in 2023-2025 was 1,844 million yuan (+19.1%), 2,054 million yuan (+11.4%), 2,269 million yuan (+10.5%), and net profit of 449 million yuan (+16.5%), 516 million yuan (+14.9%), and 576 million yuan (+11.6%), corresponding to the 2023-2025 EPS of 0.7 yuan, 0.8 yuan, and 0.89 yuan respectively.
(1) PE valuation method: Give 5-6 times PE in 2022, corresponding to a reasonable value range of 3.48-4.17 yuan/share, corresponding to HK$3.77-4.52 per share (calculated based on HK$1 = RMB 0.922); (2) EV/EBITDA valuation method: give 3.5-4 times EV/EBITDA in 2022, corresponding to a reasonable value range of 3.3 to 3.98 yuan/share, corresponding to HK$3.61-4.32 (calculated based on HK$1 = RMB 0.922); a combination of two valuations The method gives the company a reasonable value range of 3.33-4.17 yuan/share, corresponding to HK$3.61-4.52 per share, and maintains a “superior market” rating.
Risk warning: risk of the epidemic, risk of slow promotion of new business, risk of industry competition.