Incident Overview
In 2023, the company's revenue/net profit attributable to mothers/adjusted net profit were $1,806/429/428 million yuan, up 16.6%/11.5%/12.6% year on year. Excluding government subsidies ($0.95 billion in 22/23) and special bonuses of $67 million in 23, net profit was $451 million, an increase of 55.45% year on year.
23 The year-end dividend was HK$0.366 per share, with a full year dividend rate of 55.5% (28% in '22), corresponding to a dividend rate of 11%.
The company announced that its wholly-owned subsidiary has signed a share transfer agreement with Neusoft Holdings Co., Ltd. and its wholly-owned subsidiary to purchase all of Neusoft Healthcare's shares. The transaction consideration is 81 million yuan (corresponding to PS 0.79X), to be paid in cash.
In addition, Neusoft Education signed an investment agreement with Kangdao Medical Management Co., Ltd. and its wholly-owned subsidiary to strengthen cooperation in cardiovascular hospital management and collaborative medical services. The acquisition laid the foundation for the company to expand geriatric services and other fields.
Analytical judgment:
There has been steady growth in academic education. By business, in '23, the company's full-time higher education services/education resource export/continuing education services/other revenue was RMB 14.53/1.92/1.580.02 billion yuan respectively, up year-on-year
23.65%/5.34%/8.26%/-95.24% In academic education, the number of students/person fee was +7.5%/15% to 57,000/26,000 yuan. Among them, the number of students enrolled in Dalian/Chengdu/Guangdong was 2.13/2.19/13,600, up 14.3%/5.9%/0.5% year on year. The growth rate of Guangdong schools remained flat mainly due to limited capacity; the number of undergraduate, junior college, and special promotion students increased the most. The number of undergraduate, college, and special promotion students in '23 was 4.24/0.29/ 11,400, respectively, up 6.53%/-19.4%/21.27%.
In the past two years, the company launched an expansion project, expanding the campus capacity by 19%. As of '23, the three colleges had more than 60,000 beds, and the comprehensive utilization rate of full-time higher education institutions reached 94%, an increase of 3 PCT over the previous year.
The negative growth in education resource export services in the second half of the year was mainly due to customer delays in acceptance, and the annual contract debt repayment revenue was 240 million yuan. The revenue from the education resource export business in '23 was 192 million yuan, up 5.3% year on year. The first and second half of the year increased by 48.7%/-21.0% year on year, respectively. The contract debt for the education resource export business in '23 was 43 million yuan, up 10% year on year. Among them, revenue from smart education platforms, software, training rooms and content was 81 million yuan, a year-on-year decrease of 1.2%, mainly due to a 43% year-on-year decline in the second half of the year. In '23, the company cooperated with 62 institutions (down 7 from year on year, but this was mainly due to the company's focus on high-income projects in a single school), serving 24,000 students (-4% year over year), and achieved revenue of 79 million yuan (down 1% year over year). The remaining income is income from college students' practical training programs.
Continuing education resumed growth in the second half of the year, with strong growth on the 2B side. Continuing education business revenue in '23 was 159 million yuan, up 8.3% year on year, and increased 16% year on year in the second half of the year. Our analysis mainly comes from the 2B side. (1) 2B: Over 166 2B training programs have been implemented in 23 years, covering nearly 25,000 people, with a year-on-year increase of 213%, and achieved revenue of 36 million yuan, an increase of 39.3% over the previous year. (2) 2C: Currently, the company's online education platform has added more than 1.7 million registered users and 150,000 course learning users, providing 2C training to about 25,000 students.
The increase in gross margin, reduction in government subsidies, and increased incentive costs led to a lower increase in net profit margin than gross profit margin. (1) The company's gross margin in '23 was 47.9%, an increase of 4.8 PCT over the same period last year. We analyzed that the increase in gross margin mainly benefited from the increase in campus utilization. (2) Net interest rate to mother in '23 was 23.8%, down 0.9 PCT year on year. The increase in net interest rate to mother was lower than gross margin, mainly due to a decrease in government subsidies and an increase in employee incentive costs. The 23-year sales cost/management cost/R&D expense rate/financial expense ratio were 2.93%/11.48%/2.21%/4.86%, respectively, an increase of 0.43/1.90/-0.47/ -0.88PCT over the previous year. The increase in management expenses was mainly due to an increase in employee incentive costs.
The share of impairment losses on financial assets increased by 0.28 PCT to 0.63%; the share of net other income decreased by 0.41 PCT to -0.03%; and the share of other income decreased by 4.0 PCT to 8.2%, mainly due to a decrease of 52% to 46 million yuan in government subsidies. Additionally, income tax/revenue fell 0.33PCT to 8.2%.
Investment advice
We analyzed (1) academic education business: as campus utilization increases further, the number of students enrolled will further increase; according to our estimates, the average tuition fee will increase by more than 5% each year; and due to the shorter depreciation period of Guangdong University, which is expected to contribute higher profit margins in the future; (2) Continuing education business: academic education and 2C business are expected to usher in post-pandemic recovery, and the 2B business is expected to maintain rapid growth in 23 years; (3) The education resource export business is expected to maintain rapid growth in the future, mainly due to customer acceptance delays growth; (3) The education resource export business is expected to maintain rapid growth in the future. -20% growth rate. (4) The company's acquisition and expansion of the geriatric care business. Although it affects profits in the short term, it is optimistic about the medium- to long-term synergy with the education business and nurtures a second growth curve. Taking into account the impact of the acquisition business, the 24-25 revenue forecast was raised to $2,027/2.03 billion yuan, adding an additional 26-year revenue forecast of $2,815 million; however, considering short-term losses from mergers and acquisitions, the 24-25 net profit forecast was adjusted to $508/613 million to $440/481 million yuan, adding a net profit forecast of 610 million yuan for 24-25; adjusted accordingly for 24-25 EPS of $0.79/0.95 to $0.68/0.74, and an additional 26-year EPS The forecast is $0.94, and the stock price will be HK$3.15 on March 28, 2024. The corresponding PE is 5/5/4X (1 HKD = RMB 0.93), maintaining a “buy” rating.
Risk warning
Potential risks of policy changes, channel expansion and campus utilization not meeting expectations, intense market competition and new entrant threats, and systemic risks.