Overview of events
The company released interim results, with revenue of 445 million yuan in the six months to February 28, 2021, an increase of 13.1% over the same period last year, and an adjusted net profit of 156 million yuan, down 2.9% from the same period last year.
Analysis and judgment:
The increase in the number of students and the increase in per capita accommodation fees promote the steady growth of the company's income. From the perspective of the number of students, the overall number of students in 2021H1 Group increased by 7.3% year-on-year to 48900, of which Huali College / Huali Vocational College / Huali technician College increased by 3.13% and 4.92% respectively compared with the same period last year. In terms of per capita dormitory fees, the per capita half-year tuition and accommodation fees of 2021H1 Group increased by 5.4% year-on-year to 9100 yuan, of which Huali College / Huali Vocational College / Huali technician College increased by 7.5% and 7.9% respectively compared with the same period last year. As a result, in terms of revenue, the overall revenue of 2021H1 Group increased by 13.1% year-on-year to 445 million yuan, of which Huali College / Huali Vocational College / Huali technician College increased by 10.9%, 13.2%, 22.7% to 1.37 million yuan, respectively.
During the conversion period and the new school preparation, the gross profit margin of the company decreased compared with the same period last year. From the gross profit margin point of view, the gross profit margin of 2021H1 Group dropped by 3.7pct to 53.7% compared with the same period last year, mainly due to this year's conversion period and more preparations for the new campus, with obvious increases in teacher expenses, consumables and books expenses, property management fees, student status management fees, and so on. 1) teacher expenditure: the number of teachers has increased by 11.1% to 419. The increase in teacher investment is mainly due to the introduction of excellent teacher resources in Jiangmen campus, the optimization of the allocation of teachers and the widening of training channels. 2) consumables: cooperate with the upgrading construction; 3) property management fees: Zengcheng completed the expansion, increased property management fees; Yunfu substantial increase in the number of people; three colleges and universities to transform the living environment, increased daily maintenance. 4) Student status management fee: the tuition fee is increased. However, the utilization rate of the campus increased and the per capita tuition increased, of which the utilization rate of Zengcheng / Yunfu campus increased to 93.4% and 66.7% respectively. In terms of expense rate, the sales / management / financial expense rate of 2021H1 Group decreased to 4.49%, 10.52% and 4.94%, respectively, and the increase in the number of students brought about economies of scale. As a result, from the perspective of adjusted results, 2021H1 Group's adjusted net profit fell 2.9% year-on-year to 156 million, and adjusted net interest rate decreased 5.8pct to 35.1% year-on-year.
Investment suggestion
Considering increasing the cost and expense during the conversion period, it is estimated that the FY2021/22/23 EPS will increase from 0.32 to 0.35 yuan, corresponding to FY2021/22/23PE in 8-6-5. The main points of the company are as follows: (1) considering that there is more room for improvement in the gross enrollment rate in Guangdong Province, so it is accompanied by the expansion of Zengcheng and Yunfu campus. And Jiangmen Campus plans to apply for a new college license, and Huali technician College will usher in an increase in enrollment after changing its academic system. (2) tuition fees are increased by 10% every two years, and undergraduate students in vocational colleges are expected to land; (3) the conversion of independent colleges is accelerated, and the performance is expected to increase after decoupling; (4) there is plenty of cash on hand, and there are expectations of mergers and acquisitions in the future; (5) the net interest rate is likely to improve. The company has a low valuation and high room for growth, maintaining a "buy" rating.
Risk hint
Policy risk, strategy implementation less than expected risk and systemic risk in the promotion of civil law