The company's revenue was +18.1% year-on-year to 5.62 billion yuan, with sufficient cash reserves: The company disclosed its FY2023 results on the evening of November 27, 2023. FY2023 achieved revenue of 5.62 billion yuan, +18.1% year-on-year, adjusted EBITDA of 3.36 billion yuan, +17.7% year-on-year, net profit of 1.38 billion yuan, and adjusted net profit of 1.91 billion yuan, +6% year-on-year. Among them, the adjustment projects were mainly due to the impairment of goodwill of the company's secondary vocational colleges by 395 million yuan. As of the end of August 2023, the company's book cash reserves were 5.8 billion yuan.
The higher education sector grew steadily, and overseas business recovered well: the group adjusted its reporting structure this year, merged higher and secondary vocational education into the “domestic market”, and changed the name of the international education section to the “international market”. By sector, the domestic market revenue of FY2023 was 5.4 billion yuan, 18.2% over the same period last year. The increase was mainly driven by higher vocational education business. The international market revenue was 220 million yuan, +16.4% year-on-year, mainly due to the increase in the number of new enrolments, the lifting of entry restrictions after the pandemic, and the recovery of overseas business well.
There was a slight decline in gross margin, mainly due to a certain increase in teaching investment: FY2023 had a gross profit margin of 56.3%, a decrease of 1.6 pct over the previous year, mainly because the company's investment in teachers and teaching increased in order to promote the high-quality development of schools.
The number of new students and current students has increased steadily: as of the end of August 2023, the total number of full-time students enrolled in the company was 248,000, +7% year-on-year, of which 199,000 were enrolled in full-time higher education, +13% over the same period last year. In the 2023/24 academic year, the number of full-time registered new students in the company reached 97,000, +17% over the same period, including 840,000 full-time higher education students, +18% over the same period last year.
Increase investment in expansion, and the company has sufficient cash on its books: On January 10, 2023, the company announced a new round of placement. The net placement subscription amount is approximately $1.4 billion, which is mainly used to expand the university network (including campus development and potential mergers and acquisitions) and the use of working capital. As of the end of August 2023, the amount of unspent proceeds was about 600 million yuan, and the company's book cash reserves were about 5.8 billion yuan.
Profit forecast and investment rating: China Education Holdings is the leading enterprise of private colleges and universities in China. It has obvious scale advantages and outstanding operating capacity. Vocational education is the direction encouraged by China's policies, and sector valuations are expected to continue to recover. Considering that the company continues to maintain high-quality investment in improving teaching quality, expenses and expenses may remain at a high level, we lowered the company's net profit of FY2024-FY2025 from /2.46 billion yuan/2.88 billion yuan to 2196/2.45 billion yuan. The estimated net profit for FY2026 is 2.73 billion yuan, the latest The closing price corresponding to FY2024-FY2026 PE was 7/6/5 times, maintaining the “buy” rating.
Risk warning: enrollment falls short of expectations, repeated epidemics, policy risks, etc.