Event: the company acquired the Olympic Institute with a consideration of 450 million yuan. The company announced the acquisition of 100% equity of Jiangsu Huahong Science and Education Investment set Co., Ltd. with 450 million yuan in cash equity plus debt consideration on June 21, 2021, thus obtaining 100% rights and interests of the organizers of the Olympic College of Nanjing Institute of physical Education. The Olympic Academy has a revenue of 47.1 million yuan and a net profit of 3.74 million yuan in 2020. The transaction will be paid in two installments and the delivery is expected to be completed within three months. after the delivery is completed, the college will be renamed the Olympic College of Nanjing Institute of Media.
The only "Olympic" named undergraduate-level secondary college, professional setting features outstanding. The Olympic College, a second-level college under Nanjing Institute of physical Education, provides undergraduate education characterized by physical education. after 10 years of school running and accumulation, it has trained more than 5000 applied undergraduate talents for the development of the sports industry. The college covers an area of about 500 mu and has 8 undergraduate majors, including 3 sports majors and 5 media art related majors. According to the 2020 enrollment plan, sports and media art majors account for about 3%. The original professional settings will continue to be retained after this acquisition. As of May 2021, the college had about 3000 students and the tuition fee for the 2020-2021 academic year was about 1.40-16500 yuan.
The sports industry Chaoyang racetrack is combined with media art, which has a lot of room for self-growth. The State Council's "some opinions on speeding up the Development of Sports Industry and promoting consumption" puts forward that by 2025, the total scale of China's sports industry will be increased from more than 3 trillion yuan to more than 5 trillion yuan, and there is a large growth space and a large talent gap in the sports industry in the future. the integrated development of sports major and media art major will provide high-quality supply for the cultivation of industrial compound talents. At present, the total number of confirmed places in the college is 11000, and the number of students is expected to continue to increase in the next four years, and the pace of tuition fee increase is expected to be consistent with that of southward spread.
It has a strong synergistic effect with southward spread, and the profitability can be improved. The Olympic College is located in Jiangning District, Nanjing City, and has strong coordination with Nanchuan in terms of location and specialty. The two schools have outstanding advantages in running sports and media arts respectively. In the future, they are expected to cultivate applied talents around new fields such as "sports + news" and "sports + film and television". At the same time, the company is expected to rely on its own mature management and school-running experience. Through the International College, the College of continuing Education and other programs to achieve enrollment coordination, after decoupling from the senior colonel and the original shareholders, the senior colonel management fees and other non-operating fees will no longer be paid, and there is broad room for improvement in operational efficiency and financial performance.
Deepen the layout of the media art industry chain and have a broad space for long-term growth. Through this merger and acquisition, the company has strengthened its leading position in the field of private media art higher education, and the school scale and specialty setting have been further expanded. On the basis of higher education, the company has passed the Shuimuyuan studio layout art examination training business, and the art examination training has not been affected by the policy guidance of compulsory education, such as "double reduction", and the business has been carried out in an orderly manner. In addition, the company actively incubates children's art training business to create a complete ecology of media art education and broad growth space.
Investment advice. As a scarce asset of media education, the company has a strong certainty of growth. Considering that the subject matter has not yet been delivered, we temporarily maintain the company's 2021-2023 homing net profit forecast of RMB 446 million, with an increase of 41.0%, 37.8%, 21.1%, corresponding to EPS 0.27, 0.37 and 0.45, and the current price, which corresponds to PE 18X, 13X, 11X, and maintains the "Buy" rating.
Risk hint: the transaction has not yet been completed; the film and television business regulatory policy has been tightened; the industry competition has intensified; and the profitability in the process of business development is not as expected.