23H1 enrollment repair is faster than income repair, because the impact of the epidemic on long-term enrollment takes time to digest:
23H1's revenue is + 4.0% to 1.95 billion yuan compared with the same period last year, and the adjusted net profit is-2.7% to 176 million yuan. During the period, the company trained + 20% to 85000 people, and the average number of trainees was + 3% to 147000 people. During the period, adjusted profits declined slightly, mainly due to the time needed to digest the impact of the epidemic on long-term enrollment, while the front of marketing expenses and the rigidity of teachers' salary costs.
Wantong auto repair steady growth, to promote school vocational education + adult short training core strategy:
The average number of 23H1 trainers is + 2.6% to 147000 compared with the same period last year. In terms of the term structure of the average number of trainees, long-term courses are + 1% to 131000 students compared with the same period last year, and short-term courses are + 23% to 16000 students. In the long-term course, 1-2-year year-on-year-2% year-on-year 2-3-year program-38%-year-on-year period + 21%. The reason for the decline in the number of students in the two-year system in recent years is the change of the academic structure, not the decline in the scale of enrollment, that is, the conversion of the two-year system to three-year enrollment.
Split the three core brands: (1) in terms of revenue, New Oriental Education & Technology Group / Xinhua computer / Wantong Auto repair earned 9.2 / 3.8 / 400 million yuan respectively, which was-3% / + 4% / + 25% respectively over the same period last year. (2) in terms of the average number of trainees, New Oriental Education & Technology Group / Xinhua computer / Wantong Auto repair is-4% /-1% / + 20% to 5.9 / 4.2 / 39000 respectively over the same period last year. The rapid growth of Wantong auto repair income is mainly due to the strong demand for new energy vehicles and the integration of industry and education.
(3) in terms of new training, New Oriental Education & Technology Group / Xinhua computer / Wantong Auto repair + 26% / + 8% / + 22% to 3.3 / 1.3 / 20000 respectively compared with the same period last year. The growth rate of new training is higher than the average, mainly because the impact of the epidemic on long-term enrollment takes time to dilute.
The profit end of the first half of the year is under pressure due to the advance of sales expenses, so there is room for optimization:
23H1's gross profit margin was-1.8pp to 51.1% year-on-year, and adjusted net profit margin was-0.6pp to 9.0%.
In terms of cost, teachers' salaries and expenditure on teaching consumables were + 15% and 16% respectively compared with the same period last year. In terms of expense rate, the sales / management / R & D / financial expense rate of 23H1 Company is 26.3% / 13.1% / 0.4% / 3.7% respectively, the sales expense rate is year-on-year + 2.7pp, and the management rate and R & D rate are stable. In the first half of the year, the company advertised in the high-speed railway station and launched New Oriental Education & Technology Group Panda Chef IP, the sales fee is in front, and the sales rate still has room for optimization.
Give a buy rating, corresponding to the target price of HK $4.20:
Our point of view: in the short term, the impact of long-term enrollment during the epidemic will be gradually digested in the future, as new enrollment returns to a normal pace, higher campus utilization is expected to improve profitability. The potential for long-term competitiveness lies in the enhancement of academic qualifications and the continuous use of regional centers. Revenue from 2023E to 2025E is expected to be 42.4 / 49.2 / 5.73 billion yuan, + 11.1% / + 16.0% / + 16.3%, respectively, and the net profit from home is 4.3 / 6.1 / 800 million yuan, + 17.5% / + 42.3% / + 30.8% respectively. Give the company a target price of HK $4.20, corresponding to the buy rating, corresponding to the 24e fiscal year PE about 11 times.