① The teaching aid book publisher all of Wenjiao went to Hong Kong for an IPO. What are the highlights of the profitability of the industry? ② The company's sales expenses have soared by more than 60% in the past three years. What are the effects of business expansion?
Finance Association, April 23 (Editor: Feng Yi) On April 22, Quanpin Culture & Education Holdings Co., Ltd. submitted a listing application to the main board of the Hong Kong Stock Exchange. CITIC Construction Investment International was its sponsor.
According to the prospectus, Quanpin Wenjiao is an independent teaching aid book planner and distributor in China. It is committed to producing and providing high-quality teaching aids, student supplies and related services.
According to Frost & Sullivan's data, according to 2022, Quanpin Wenjiao is the fifth largest independent textbook planner and publisher in China, with a market share of 5.7%.
At the same time, the company is also the third largest independent planning and distributor of teaching aids in compulsory education in China, with a market share of 7.7%.
Financial reports show that in the 2021-2023 fiscal year, the full product culture and education achieved revenue of about 514 million yuan, 496 million yuan, and 622 million yuan, respectively. In the same period, the company's total annual profit and comprehensive revenue were approximately RMB 349.08 million, RMB 344.47 million, and RMB 643.31 million respectively.
Quanpin Culture and Education revealed that the financing will mainly be used to optimize the supply of rich products and services, promote brands and strengthen distribution networks, improve technical standards, and find potential acquisition and investment opportunities.
At the industry level, in 2022, the market size of other services (such as extracurricular tutoring activities) declined, causing the market size of student-specific products and services in 2022 to decline compared to 2021.
At the same time, the Chinese student textbook market is fiercely competitive, and the competitive pattern is relatively scattered. The market size of the textbook market contributed by independent Chinese planners and publishers grew from RMB 35.9 billion in 2018 to RMB 43.6 billion in 2022. The compound annual growth rate from 2018 to 2022 was 4.9%, and is expected to reach RMB 78.2 billion in 2027, with a compound annual growth rate of 12.4% from 2022 to 2027.
At the company's business level, despite Quanpin Wenjiao's disclosure in the prospectus, the company successfully led a series of diversified student supplies businesses, growing at a compound annual growth rate of 390.4% from 2021 to 2023, opening up a second growth curve.
However, as of 2023, the teaching aid business still accounted for 97.4% of revenue, and the student supplies business had revenue of only 8.61 million yuan.
It can be seen that textbooks are still the core products of all literature and education. From 2021 to 2023, the gross margin of the textbook business was 36.1%, 37.1%, and 42.0%.
It is worth noting that in 2021-2023, sales expenses for all products of education increased dramatically, from 555.61 million yuan in 2021 to 889.14 million yuan in 2023, an increase of more than 60%.
However, the sharp increase in sales expenses did not match the increase in revenue, and the company's revenue scale increased by only about 21% in 2021-2023.
Furthermore, according to the prospectus, as of December 31, 2023, the company's sales network covered 31 provincial administrative districts across the country, and it has cooperated with 982 dealers. In 2021, 2022 and 2023, the company's distribution network revenue accounted for 93.1%, 93.7%, and 90.3% of its total revenue, respectively.
Taken together, the company's nationwide sales network also faced efficiency problems during the expansion period.
Quanpin Wenjiao also suggested that the company's business and operating performance are affected seasonally, mainly by school semester factors, and that there are seasonal fluctuations in all aspects of the company's operations, such as sales, working capital, and operating cash flow.
On the other hand, the company's business not only faces fierce competition, but the core textbook business also requires cooperation with third party publishing houses. Relevant cooperation and changes in market share, as well as the impact of policy regulation, are major risk factors facing the company's business.
