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中国科培(1890.HK):资金状况稳健 恢复现金分红

China Science and Technology (1890.HK): Financial situation is steady and cash dividends are restored

華泰證券 ·  Apr 30

Interim results were generally in line with expectations, and cash dividends were restored

China Kepei 1HFY24 achieved revenue of 872 million yuan (yoy +10.4%), net profit of 452 million yuan (yoy +6.7%); gross margin of 60.8% (yoy-1.1pct), and net margin of 51.9% (yoy-1.8pct).

As debt decreased, 1HFY24 restored cash dividends with a dividend ratio of 30%. The company's 1HFY24 revenue and net profit were 52%/57% of our full-year forecast, respectively, which is basically in line with expectations. We expect FY24-26's net profit to be $797/8.39/880 million, based on the DCF target price of HK$4.48 (WACC is 12.99%, sustainable growth rate is 1%, HKD/RMB 0.90).

Maintain “buy-in.”

The increase in undergraduate share drives higher education revenue growth; expanding the international education business, 1HFY24's higher education course tuition revenue was 772 million yuan, an increase of 13.2% year on year. We believe that mainly due to the increase in the proportion of undergraduate students enrolled, the number of undergraduate freshmen/enrolled students in the 23/24 academic year increased 22%/10% year on year, and the total number of undergraduate students reached 65,000, accounting for a 6.2pct year-on-year increase. The student structure was further optimized. In addition, the company has established a new overseas division to cooperate with internationally renowned study abroad institutions to provide students with rich opportunities to study abroad at famous overseas schools. In the future, the company is expected to further expand language training and study abroad services for students within the group.

Overall capital expenditure is stable and manageable

1HFY24's capital expenditure is 223 million yuan, mainly for the expansion of school buildings and dormitory buildings in Guangdong schools and Huaibei schools, investment in experimental training facilities and equipment for various schools within the group, and the improvement of the campus environment. The company plans to spend 30% of its annual EBITDA on capital expenditure to achieve sustainable endogenous growth. Based on this, we expect FY24/FY25 annual capital expenditure to be around 35/400 million yuan.

The debt reduction plan progressed steadily, and 1HFY24 resumed 30% cash dividends

FY23 suspended dividends in order to prioritize repayment of M&A loans. As loans were gradually repaid, 1HFY24's total interest-bearing bank and other loans decreased by about 730 million yuan compared to the end of FY23, corresponding to a 2.5 percentage point year-on-year decrease in the 1HFY24 financial expense ratio. The balance ratio was greatly optimized to 21.0% from 39.9% on August 31, '23, and financial health improved markedly. The company resumed interim dividends at 1HFY24, with a dividend of HK$0.07 per share, accounting for about 30% of the current net profit to mother, and paid in cash.

The company is expected to maintain a stable dividend of around 30% in the future.

Risk warning: Supervisory authorities are tightening supervision of tuition fees; the number of students enrolled is growing less than expected; and the progress of for-profit registration is slow.

The translation is provided by third-party software.


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