Event: The company released the FY23 financial report, achieving operating income of 5.616 billion yuan, a year-on-year increase of 18.1%, net profit of 1.38 billion yuan, a year-on-year decrease of 25.2%, and adjusted net profit of 1,901 billion yuan, an increase of 6% over the previous year.
Both domestic and international sectors grew rapidly, and gross margin remained at a high level. By business sector, FY23's domestic market segment revenue increased 18% year on year to 5.396 billion yuan, accounting for 96% of the company's overall revenue; international market segment revenue increased 16% year on year to 220 million yuan. The company expanded its international education cooperation map and further strengthened domestic and foreign resource collaboration. Currently, it is developing in-depth cooperation with institutions in the United Kingdom, Canada, Australia, New Zealand, Singapore and other countries. The gross profit margin of FY23 was 56.3%, which remained at a high level. The sales expense ratio fell 0.3 pct to 3.2% year on year, and the management expense ratio fell 1.4 pct to 13.8% year on year.
Endogenous growth has been strengthened, and the pace of expansion of international education has accelerated. In terms of domestic business, the third phase of construction of the new campus of Zhaoqing School in Guangdong is progressing smoothly, and construction of the Shandong Yantai Campus has officially begun. The first phase has a planned area of more than 700 acres and is expected to be put into use in the 24/25 school year. In terms of international business, the company continues to strengthen international cooperation between Chinese member schools, Australian schools and British schools, and the number of new students in international education continues to expand.
The scale of higher education continues to expand, and the number of new students has increased dramatically. The policy encourages the development of higher vocational education. The company actively promotes the high-quality development of vocational education in its colleges and universities, and deepens the integration of industry and education and school-enterprise cooperation. According to the financial report of China Education Holdings, in the 2023/24 academic year, the number of full-time registered new students in the group was about 97,000, an increase of about 17% over the previous year; as of August 2023, there were about 248,000 full-time students, an increase of about 7% over the previous year. It is expected that the growth rate of new students will continue to be maintained in the future.
Profit forecast: FY23-25 is expected to have revenue of 66.37/76.06/8.520 billion yuan, YoY +18.2%/14.6%/12.0% respectively, net profit of 22.02/25.20/2,799 billion yuan, YoY +19.3%/14.5%/11.1%, respectively, maintaining the “buy” rating.
Risk warning: risk of impairment of goodwill, risk of mergers and acquisitions being restricted by policies, and student quota growth falling short of expectations