FY23 had revenue of 2,303 million yuan, adjusted net profit of 366 million yuan, dividend rate of 30%. FY23 (2022/9/1-2023/8/31), the company's revenue was 2,303 million yuan (same below, all in RMB); adjusted net profit was 366 million yuan. The board of directors recommended a final dividend of RMB 2.34 per share, with a dividend payment rate of 30%.
By revenue type, FY23's comprehensive education service revenue was 1,223 million yuan, accounting for 53.1% of the total; school cafeteria operating revenue was 485 million yuan, accounting for 21.1% of the total; management and franchise fee revenue was 39 million yuan, accounting for 1.7% of the total; and revenue from the sale of student supplies was 555 million yuan, accounting for 24.1% of the total.
As of the end of August 31, 2023, the company's contractual liabilities were $1,315 million, and the company's deferred revenue was $232 million.
FY23 gross profit margin of 33.8%, net profit margin after adjustment of 15.9%
FY23 had gross profit of 779 million yuan, a gross profit margin of 33.8%; adjusted net profit of 366 million yuan, and a net profit margin of 15.9%.
FY23 had a sales cost of 1,524 billion yuan. According to cost types, FY23 material consumption costs are 341 million, accounting for 22.4% of the total; employee costs are 397 million, accounting for 26.1% of the total; depreciation and amortization costs are 184 million, accounting for 12.0% of the total; student supplies sales business corresponding to procurement costs of 459 million, accounting for 30.2% of the total; in addition, teaching activity costs, utility costs and other costs account for 7.0%, 1.1%, and 1.3%, respectively.
23/24 The number of high school students enrolled at 37,000 increased by 44%. Accelerated core business adjustments. By the end of the 22/23 school year, the number of high school students in the company's schools was 25,500; at the beginning of the 23/24 school year, the number of high school students was 36,700, an increase of 43.8%; the company's current school network capacity reached 200,000, and there was still room for double student growth.
In the college entrance examination in '23, a total of 127 people were admitted to the top 50 of the world, including Qingbei, the college entrance examination of the company's schools. The undergraduate rate was about 83.5%, and the one rate was about 50.3%. At the same time, students from the company's schools continued to achieve excellent results in various academic examinations, competitions, and extracurricular activities. While expanding, the company also focused on teacher training. As of the end of the 22/23 school year, a total of 2,090 full-time teachers were employed, an increase of 85.9% compared to 1124 at the end of the 21/22 school year.
The focus is on developing high profitability, and “multi-branch” education value-added service companies have adjusted the development focus of basic education to high-profit high schools. Within the next 5 years, 3-5 new high schools will be opened every year, and 40-50 high schools will be operated nationwide by 2027. At the same time, the number of high school students enrolled at that time may reach 60,000 to 80,000; at the same time, by 2027, the company aims to have 100 students enrolled in Qingbei in a single term and 200 students enrolled in the top 50 QS universities.
The company's original Rieter Curriculum has developed into a comprehensive education curriculum system integrating comprehensive literacy courses, special courses in science and technology, and study tours. Among them, comprehensive literacy courses have been implemented for 2 complete fiscal years, and the categories have been further enriched, and the quality of courses has been substantially improved; science and technology courses have been implemented in more than 30 schools within the group, covering more than 40,000 students, and registration demand for special college classes in Guoxue is growing.
Demand for study tours grew rapidly along with the recovery of the tourism industry and the rise in student interest. In the 23rd academic year, the company's study tours were carried out in schools throughout the group and 9 external schools, serving more than 47,000 students; the company expects that the number of participating students may exceed 100,000 in 24 years.
Extend expansion through the trusteeship model to create new performance growth points
The company previously adjusted its expansion model. In addition to operating in second-tier and third-tier cities using a leasing model to light assets, the company also exported the teaching management system that had been settled over 20 years through the trusteeship model, and standardized Tianli education management services were exported to civic schools with improved academic performance. FY23 has hosted a total of 7 schools. Currently, there is strong demand for high-quality private education services in the market. As the business is further refined, the progress of trusteeship contracts is expected to accelerate in the future, becoming a new growth point for the company's performance.
Layout cloud platform business, comprehensive digital upgrading of teaching and management
In '23, the company's digital teaching has completed R&D, testing and launch of various products such as teaching cloud platforms and digital teaching and research platforms; by the end of the fiscal year, it had successfully completed application promotion in more than 70 internal and external schools. The smart education app added 50,000+ registered users in the 2023 school year, with a cumulative total of more than 100,000 registered users, laying a solid foundation for the cross-regional, high-quality and standardized export of digital teaching products.
Maintain profit forecasts and maintain “buy” ratings
The company is a leading comprehensive education service operator in western China. With its solid layout in Sichuan Province, it has steadily expanded to 36 cities across the country; with the restructuring of its operations and the continued development of comprehensive operating services such as quality education, revenue and performance are expected to expand rapidly. We expect the company's FY24-25 revenue to be RMB 3.2 billion and RMB 4.5 billion respectively, adjusted net profit of 550 million and 850 million yuan respectively, corresponding EPS of RMB 0.26 and 0.40 per share, respectively, and PE of 11 and 7 times, respectively.
Risk warning: enrollment falls short of expectations, loss of core executives, intense market competition, risk of policy changes, etc.