Core viewpoints
Spring enrollment and junior college places continue to grow, and college entrance examination enrollment is advancing steadily. The undergraduate scale of Huali College increased by 773 compared with the same period last year, reaching a total of 1547 (excluding additional places). The enrollment plan for the college entrance examination in the spring of 2021 is 7775, an increase of 3159 students combined with new majors (yoy+68.47%) over last year.
The undergraduate enrollment work is gradually coming to an end, the junior college is mainly carried out in August, and the enrollment work is progressing steadily.
The conversion is progressing smoothly, and the profit can be thickened. Huali College of Guangdong University of Technology has been successfully approved to be converted into an independent undergraduate private university, officially renamed as "Guangzhou Huali College". After the completion of the transfer of Huali College, the enrollment of students for the 21st academic year has been fully enrolled in accordance with the name of the new school and managed in accordance with the management system of the new school, and the freshmen do not need to bear the management fees. with the gradual graduation of older students, it is expected that the management fees will not be reflected in the cost in the 25th academic year.
Equity incentives and special dividends to share the growth of the enterprise. On July 21, the company approved the adoption of a share incentive scheme to purchase shares from the open market to reward and motivate talent, with a ceiling of 2% of the company's issued share capital and a plan period of 10 years. At the same time, it announced a special dividend of 0.0518 yuan per common share, with a dividend yield as high as 6.4%, safeguarding the long-term interests of shareholders.
Short-term disturbed by the education policy and investor sentiment, the policy encourages the general direction to remain unchanged. The upgrading of vocational undergraduate work in Huali Vocational College has been included in the 13th five-year Plan of colleges and universities in Guangdong Province. with the landing of the follow-up vocational education law, vocational undergraduate students will enjoy the increase of places and tuition fees at the same time. The income of vocational colleges is expected to continue to rise.
Financial forecasts and investment suggestions
The direction of the industry policy remains unchanged, there is enough room for the existing junior college in the short and medium term, and the development potential of the long-term junior college and the newly-built Jiangmen campus is expected. It is predicted that the annual return profit of 21e to 23e is 3.11x3.67 / 417 million yuan (the original forecast of 2111x22 is 314ppm, the 22-year difference is due to the reduction of conversion management expenses). Considering the factors of market capitalization, liquidity and valuation fluctuation, five higher education companies are selected as comparable companies. The average PE after 22e adjustment is 6.8x, corresponding to 2.498 billion yuan (RMB), corresponding to 2.07 yuan per share (RMB). The exchange rate of the Hong Kong dollar to RMB is 0.83, or HK $2.49, with a "buy" rating.
Risk hint
The enrollment is not as expected, and the process of the new campus is not as expected.