Core views
The company's revenue for the first three quarters of FY23 (corresponding to 20220901-20230531) was 1.46 billion yuan/ +16.1%, and gross profit was 736 million yuan/ +16.3%, mainly due to the increase in the number of students enrolled and average tuition fees. As of the end of May 2023, the total number of students enrolled was 871,000 yuan/ +11.6%.
Looking forward to the company's future development, 1) supported by increased brand recognition and a high employment rate, FY24 enrollment increases 19.4% year-on-year; 2) with favorable vocational education policies, we will further promote the integration of industry and education to accelerate the development of talents in new engineering, health medicine, etc.
occurrences
The company released operating data for the first three quarters of FY23 (corresponding to 20220901-20230531):
The company's revenue for the first three quarters of FY23 was 1.46 billion yuan/ +16.1%, and gross profit was 736 million yuan/ +16.3%. As of the end of May 2023, the total number of students enrolled was 8,7068 students/ +11.6%.
Brief review
The increase in the number of students enrolled and average tuition fees has led to a steady increase in the number of students enrolled in the FY23Q1-3 company.
2FY23Q1-3 revenue was 1.46 billion yuan/ +16.1%, of which higher education, secondary education, and non-academic education accounted for 84.2%, 12.2%, and 3.6% of revenue. The steady increase in the company's revenue is mainly due to: 1) The increase in enrollment numbers and average tuition fees at its institutions. In the nine months ending May 31, 2023, the number of students enrolled in the Group was adjusted to 87,100, a year-on-year increase of +11.6%, exceeding the target of 83,000 students enrolled in FY23. The average tuition fee reached 22,700 yuan in the middle of FY23, +5% year-on-year. FY24 enrollment increases 19.4% year-on-year, leading the employment rate and brand power industry. Enrollment in FY24 increased 19.4% year over year, thanks to increased brand recognition and support from a high employment rate. The company clearly positions the students' graduation destination. The employment rate and employment quality are at the forefront of the province. The employment rate of 2022 graduates of Guangzhou Huashang Vocational College reached 97.8%, and the number of people enrolled and the acceptance rate reached a new high of 61.5%; Sichuan City Vocational College ranked first in the competitiveness rankings of higher vocational colleges in China in the past three years; the initial employment rate of 22nd year graduates reached 88.8%.
With favorable vocational education policies released, we will further promote the integration of industry and education, and accelerate the deployment of talent training in key emerging industries in the country (new engineering, health medicine, etc.). On June 8, 2023, eight departments including the National Development and Reform Commission jointly issued the “Implementation Plan for Enhancing the Integration of Occupational Education, Maternity and Education, Empowerment and Enhancement Action (2023-2025)”, which focuses on four areas, including promoting the mother-education integration head-geese effect, consolidating the foundation for the development of vocational colleges, building practical training bases for the integration of maternity education, and deepening school-enterprise cooperation in integrated maternity education. The company establishes industrial colleges and opens new majors that meet market needs, and cooperates with leading enterprises to cultivate applied talents, such as medical aesthetics, e-commerce, animation, etc. The company continues to improve its professional settings, adding 3 undergraduate degrees and 6 new senior majors (big data in finance and taxation, live e-commerce, business data analysis, etc.) around new engineering and health medicine. Currently, the number of students enrolled in nursing, nursing, home economics, etc. majors that meet social policy guidelines has reached 11,800, and the number of students enrolled in fields related to intelligent technology, information technology, intelligent manufacturing, and computers has reached 19,400.
Investment suggestions: The company's revenue for FY2023-FY2025 is expected to be 19.24, 21.81, 2,432 billion yuan, up 14.14%, 13.36%, and 11.51% year on year; net profit from homecoming is 5.77, 667, 783 million yuan, +1.62%, +15.58%, and +17.44%, corresponding to the latest PE of 4.5, 3.9, and 3.3X, maintaining the “buy” rating.
Risk warning: 1) Risk of industry policy fluctuations: As an important livelihood industry, the education industry is subject to strict policy supervision. The operation and development of education-related businesses is greatly affected by relevant policies and regulations relating to national policies, local regulations, education systems, etc., and may face risks brought about by changes in industry policies. 2) The impact of the decline in the freshman population on the total demand of the industry: The company mainly runs private higher education/vocational education and academic education, which is closely related to the population. If the neonatal population declines later, it will have an important adverse effect on the overall demand of the industry. 3) Risk of declining profitability: Education companies enjoy land, tax and other policy risks, which are accompanied by the transition to for-profit schools and continue to advance, or have an impact on profitability.