Lanjing News October 22nd (Reporter Chi Lei) - Recently, neuedu officially started the construction of the Health Medical Science and Technology Park in the High-tech Zone of Dalian. Just a few days before the groundbreaking, neuedu issued two announcements regarding the latest situation of the group's business operation and the acquisition of land use rights. From these two announcements, we may see the development path chosen by this well-established private higher education institution with a history of over 20 years in the changing economic situation of 2024.

Campus capacity is saturated, opening up a second business growth curve.

In the announcement regarding the latest situation of the group's business operation, neuedu stated that the group mainly operates in two major business sectors: education and medical care. The education service sector mainly covers three types of services: full-time academic higher education services, educational resource exports, and continuing education services. This announcement mainly discloses that the three universities under the group - Dalian Neusoft Institute of Information, Neusoft College Chengdu, and Neusoft College Guangdong have all started classes and have completed the enrollment and registration work for the 2024/2025 academic year.

The announcement shows that the number of new students in the three universities has increased from 18,056 in the 2023/2024 academic year to 18,294 in the 2024/2025 academic year, an increase of about 1.3%. However, the announcement also explicitly indicates that due to campus capacity limitations, the number of current students in Chengdu College and Guangdong College has slightly decreased in the 2024/2025 academic year. But the overall number of current students in the three universities still maintains growth, with the comprehensive campus utilization rate of the three universities reaching about 96.2% - already highly saturated, and the student capacity has basically reached the critical point.

In fact, the year-on-year growth rate of new student enrollment in neuedu over the past three years has been gradually decreasing. As shown in the chart below, Neusoft College Chengdu and Neusoft College Guangdong, both experienced a significant increase in the number of new students in the 2023/2024 academic year - Chengdu College saw a huge increase of 27.6%, while Guangdong College also had an 8.6% increase. However, the increase in the number of new students in these two colleges for the 2023/2024 academic year was minimal, and even slightly decreased year-on-year in the 2024/2025 academic year. It can be said that the capacity of these two colleges can no longer accommodate more students. Only Dalian College, located at the headquarters of neuedu, has had a relatively stable new student number growth of over 10% for three consecutive years.

If neuedu wants to further expand the influence of the schools under the group and promote revenue scale growth, it may face two options: expanding the student capacity of schools (building new campuses) and seeking a second business growth curve. And for this, we can further explore with another announcement regarding the acquisition of land use rights.

The announcement regarding the acquisition of land use rights shows that neuedu successfully bid for the land use rights of Plot A located in the High-tech Zone of Dalian, Liaoning Province for 0.253 billion yuan, and successfully bid for the land use rights of Plot B located in the High-tech Zone of Dalian, Liaoning Province for 13 million yuan. These plots will be used for campus expansion projects, with deep integration of education, technology, and health care as the core, intended to build the Neuedu Health Medical Science and Technology Park, including student practice training bases, apartments, and other facilities.

The land area of A is 25176.95 square meters, with a building area of 103750 square meters; the land use is for hotel use (service apartments), with a commercial land use nature (service apartments). The land area of B is 2906.32 square meters, with a building area of 8100 square meters; the land use is for medical and health care, with a land use nature for medical and health care.

In the announcement, Neusoft Education specifically pointed out that these plots are adjacent to Dalian University's main campus and training base. With the continuous stable growth of Dalian University's enrollment and student population, the campus capacity is increasingly tight. As of October 10, 2024, the number of new students enrolled for the 2024/2025 academic year at Dalian University is 8188. The number of students on campus has reached 23605, a year-on-year increase of 10.6%, and the campus utilization rate of Dalian University is approximately 96.2%.

Therefore, Neusoft Education stated that in order to enhance Dalian University's campus capacity, the group plans to acquire the land use rights of these plots to carry out the campus expansion project of Dalian University and build the Neusoft Education Health Medical Technology Park. This includes student practice training bases, apartments, and other facilities, focusing on the development of the "IT + digital media + health and medical" professions, in the direction of talent practice, technology results transformation, and entrepreneurial incubation.

In summary, it is highly probable that new student dormitories will be built on plot A; while plot B may be used for a medical-related student practice training base. Therefore, Neusoft Education has probably chosen to "walk on two legs": on one hand, expand the school's student carrying capacity (constructing a new campus); on the other hand, focus on developing the health and medical business (seeking a second business growth curve).

Exploring the "silver economy" from the perspective of health care and medical services.

Neusoft Education's focus on the health and medical business is already evident this year.

Within its 2023 annual report on "Future Development Plans", in the section on "Development Environment", it mentions the rapid growth of the "silver economy", which has led to the two major markets of health care and elderly education.

In the "Development Strategy" section, it specifically elaborates on the relevant ideas: expanding into the fields of elderly education and elderly care, developing university-linked medical-care industries, and elderly universities. Relying on medical and care service platforms with two affiliate hospitals as core facilities, based on national qualifications for pilot units in national elderly universities, combining IT, digital media, and smart health care as driving forces, expanding into the field of elderly education services, while also strengthening the cultivation of high-quality elderly care practitioners with digital technology skills.

On May 31, neuedu's subsidiary, neuedu Ruizhin, acquired 100% equity of neuedu Health Medical Management Co., Ltd. from neuedu Holdings for a cash consideration of 81 million yuan. After the acquisition, neuedu Health Medical and its affiliates became new members under neuedu.

On August 27, neuedu released the 2024 interim report. The report shows that neuedu's operating income in the first half of 2024 was approximately 0.968 billion yuan, a year-on-year increase of 5.4%; gross profit was 0.511 billion yuan, an increase of 11.2% year-on-year, with a gross margin rising to 52.7%; net income was 0.278 billion yuan, a year-on-year increase of 1.4%.

In the interim report, neuedu emphasizes the continued focus on full-time academic higher education as the core business, expanding the output of education resources and continuing education service scale, while also expanding elderly education and medical care business, creating a new ecosystem of integrated development in education, medical care, and health.

For the future, neuedu stated that it will use the research and development capabilities of education + technology + health care as the cornerstone, utilize artificial intelligence and related technologies as tools, integrate education, medical care, and health care resources, provide education products and services to more schools and learners, seize the opportunity of silver economy development, and expand elderly education and medical care businesses.

On September 9, neuedu's Phoenix College officially opened. According to neuedu's official information, neuedu Phoenix College is the main business sector of elderly education under neuedu Science and Technology Group. It relies on the education resources of three universities established across the country by neuedu, the medical and care resources of Dalian Ruikang Cardiovascular Hospital, Dalian Ruikang Zhuomei Dental Hospital, and Ruikang Nursing Home, as well as the health care resources of six Yunshe Hotels operated nationwide by neuedu, to create a comprehensive elderly education system of "teaching-medical-health-care-leisure-tourism".

From the introduction of Phoenix College, we can see that almost all business sectors under neuedu are interconnected, providing strong support for Phoenix College. neuedu places high expectations on medical care for the silver economy.

However, it should be noted that while the silver economy is a brand-new blue ocean with extremely broad development prospects; on the flip side, players in the silver economy track, due to the uniqueness of the silver-haired group (family situation, economic conditions, health conditions, etc.), most of their explorations are like "crossing the river by feeling the stones". Therefore, if neuedu wants to establish a foothold in the silver economy market, it will inevitably need to invest a considerable amount of manpower, material, and financial resources in exploration. Whether the input is proportional to the output will need to be verified by the market feedback.