Summary of events: FY2020 revenue increased by 21.4% year-on-year, core net profit increased by 21.4% year-on-year, 35.3%FY2020 achieved income of 867 million yuan, up 21.4% year-on-year, core net profit of 608 million yuan, up 35.3% year-on-year growth of more than 30% in 2016-20; cash and equivalents were 1.294 billion yuan, up 16.4% year-on-year.
Analysis and judgment: volume and price increase, profitability increases
Sub-business income: FY2020 tuition income of 824 million yuan, an increase of 25.74% over the same period last year, mainly due to the number of undergraduate + adult education and the increase of tuition fees.
The income from accommodation fees was 37.02 million yuan, down 29.37 percent from the same period last year, mainly due to the refund of 25 million yuan for accommodation fees affected by the epidemic, and 5.93 million yuan for other educational services, down 4.94 percent from the same period last year.
Quantity and price: (1) in 2021, the number of students enrolled was 92624, an increase of 59.9% over the same period last year. The number of students in two schools in Guangdong increased by 42% to 81950. Among them, the number of students in Polytechnic / Zhaoqing School increased by 23167pm to 73482, respectively. The number of undergraduate / junior college / adult university / off-campus adult university students of Guangdong Institute of Technology increased by 5439 University508University15710 to 29262Universe 30586, an increase of 22.8%, 22.8%, 7.4%, 52.8%, 105.6% The number of Harbin schools waiting to be merged increased by 19% to 10674. (2) the average tuition fee of Guangdong undergraduate / junior college / adult university / secondary vocational school increased by 4.29% 3.97% 22.80% 37.98% to 19840 yuan / 17249 yuan / 1654 yuan / 8499 yuan respectively over the same period last year.
Profitability: gross profit margin 60.4%, year-on-year increase in 2.4PCT, mainly due to the increase in the number of students and average tuition fees; the rate of sales / management / financial expenses increased year-on-year-0.77/2.03/0.76PCT to 2.64% 12.86% picks up 1.02%. The increase in administrative expenses is related to equity incentive costs and M & A fees. The core net profit rate increased to 70.11% from the same period last year, mainly due to the increase in gross profit margin and the leverage effect of actual expenses.
Growth drivers: (1) Endogenous, we expect compound growth of 15% in the next three years, 20% in income, and 25% in net profit. We expect the number of undergraduates and adult education to be the biggest driving force: we expect Guangdong schools to acquire land and Harbin schools to maintain enrollment growth after the completion of undergraduate evaluations. we expect school-enterprise cooperation to promote a sustained growth rate of 25% and 30% for out-of-school adult education students in the future. We estimate that the proportion of five-year programs in secondary vocational schools has increased to 70%, and the addition of new undergraduate self-examination programs will promote the growth of adult education in the school by 20% in the future. We expect tuition fees to grow by 5% to 8% a year: tuition fees in Guangdong and Heilongjiang provinces, to which the four schools belong, can be priced independently, so we expect to achieve a compound income growth of 20% over the next three years. Improved management efficiency and economies of scale: net profit is expected to double in 2023 compared with 2020 without taking into account new mergers and acquisitions. (2) in terms of mergers and acquisitions, undergraduate schools in Harbin were acquired last year, and undergraduate schools in Anhui Province have been acquired this year. In the future, we will seize the opportunity for the conversion of independent colleges to acquire more high-quality undergraduate schools.
Investment advice:
The company's school enrollment rate and employment rate are both high, regional brand strength is outstanding, endogenous growth support is strong, in addition, mergers and acquisitions are expected to integrate. Taking into account the support of future endogenous growth, FY21-22EPS is adjusted from 0.38 to 0.39, with a new FY23EPS0.56 and a target price of HK $7.8 (HK $1 = HK $0.85) corresponding to 17 times PE in 21 years.
Risk hint
The uncertainty under the influence of the epidemic, the pace of expansion is lower than expected, enrollment is lower than expected, existing business quality control risk, systemic risk.