Event Overview:
23H1 Jianqiao Education achieved revenue/net profit of 494/183 million yuan, an increase of 22.2%/37.8% over the previous year. The growth rate of net profit over revenue growth was mainly due to lower management and financial expenses. The company paid an interim dividend of HK$0.1 per share, with an annualized dividend rate of 5.2%.
Analytical judgment:
Higher pricing and higher student numbers. (1) By business, 23H1's tuition fees/boarding fees/education-related service revenue was 422/0.64/07 billion yuan respectively, up 18.6%/41.6%/148.5% year-on-year. The large increase in accommodation revenue was mainly due to the end of the epidemic and the resumption of accommodation. (2) Judging from the number of students enrolled in the 2022/23 academic year, the total number of students enrolled in the 2022/23 academic year reached 24,467, an increase of 9% over the previous year. Judging from their academic qualifications, the proportion of post-graduate students increased. Among them, the number of undergraduate/college/specialist graduate students was 17945/2327/4195, an increase of 1.71%/-4.12% /75.96% over the previous year, respectively.
(3) Looking at tuition fees, we estimate that the average tuition fee for 23H1 is 17,261 yuan, an increase of 9% over the previous year, mainly due to the increase in tuition fees for freshmen in the 2022/23 academic year, tuition fees for undergraduate students from 30,000 to 39,800 yuan to 32,800 yuan, college fees increased from 150,000 yuan to 20,000 yuan, and tuition fees for undergraduate students increased from 23,000 yuan to 23,000 yuan to 38,000 yuan. Judging from the accommodation fee, due to the intelligent transformation of the second-phase dormitory, the boarding fee for new students increased from 5,800 yuan to 7,800 yuan, an increase of 34.5% over the previous year.
Benefiting from the benefits of increased scale, lower management expense ratios contributed to an increase in net interest rates. 2023H1's gross margin was 68.51%, up 0.44 PCT year on year, reaching a record high. Sales costs increased by 26 million yuan year on year, of which salary costs increased by 17 million yuan. The company's net profit margin was 37.12%, up 4.21PCT year on year. The increase in gross margin was mainly due to: 1) Sales/management/other/financial expense ratio decline -0.34/3.47/-0.30/0.73 PCT. Among them, the decline in management expense ratio was mainly due to a decrease in unit management expenses due to increased revenue scale; the decline in financial expense ratio was reduced by 5.7% in the scale of interest-bearing loans, a decrease in average annual interest rate of 0.35PCT and government preferential interest policies; the increase in sales expense ratio was mainly due to the college's brand strengthening Advertising expenses; 2) The share of other revenue and revenue increased by 0.60 PCT, benefiting from the normal opening of campuses after the epidemic, a year-on-year increase in operating rental revenue of 107.8% and an increase in government subsidies (mainly local government tax rebates); 3) The income tax rate increased by 0.39 PCT.
Investment advice:
Future growth drivers: 1) The company is a listed company that has completed a for-profit transformation, and there is still room for improvement in tuition fees; 2) The third phase of the school building was put into use in September 2022, and the fourth phase of the school building construction plan began in December 2022. The total construction area is about 86,400 square meters, including a teaching and training building, 3 talent apartment buildings, and a multi-functional R&D center. It is expected to be put into use in the 2024/25 school year. 3) Combining the advantages of industrial clusters and government support in the Lingang region, the company's advantages in integrating maternity and education are worth paying attention to. It is also expected to expand a new business model after investing in the fourth phase of the school building in the future.
Maintaining the 23/24/25 revenue forecast of $9.43/10.69/$1,208 million, estimated net profit for 23/24/25 to $2.7/3.2/370 million, corresponding to 23/24/25 EPS of $0.65/0.76/0.90, and the closing price of HK$3.85 on August 31, 2023, corresponding to 23/24/25 PE 5.5/4.7/4.0 times (HK$1 = RMB 0.93), maintaining the “buy” rating.
Risk warning
The enrollment situation is lower than expected, and there is a systemic risk.