The company released its 2021 semi-annual report: 2021H1 achieved revenue of 444 million yuan, an increase of 15.69%; net profit of 50 million yuan, a decrease of 18.90%; net profit of the non-return mother was 49 million yuan, a decrease of 19.83%; net operating cash flow was 70 million yuan, a decrease of 33.74%; EPS (basic) 0.1688 yuan/share, a decrease of 29.84%; ROE (weighted) 5.35%, a decrease of 2.43 percentage points.
2021H1 achieved revenue of 444 million yuan, an increase of 15.69%. Among them, its subsidiary, Shaanxi Longmen Education, achieved revenue of 255 million yuan, an increase of 4.2% over the same period. The increase in the company's revenue side was mainly due to the impact of the COVID-19 pandemic on ink business operations in the same period last year and the improvement in 2021H1 business conditions. The net profit of 2021H1 was 50 million yuan, down 18.90% from the same period. The impact of the epidemic on the company's schools was mainly reflected in the postponement of the fall 2020 school year until the end of the first half of 2021, and the impact of the spring epidemic prevention requirements on business development. By business, 2021H1's vocational school and repetition business, K12 training, and education technology products achieved revenue of 1.30, 1.17, and 01 billion yuan respectively, up -25.75%, 77.49%, and 75.28% from the same period last year; ink and similar products achieved revenue of 194 million yuan, an increase of 37.64% over the same period, and net profit turned a loss into a profit.
The gross profit margin of 2021H1 company was 37.7%, down 5.7 percentage points from the same period, mainly due to the impact of the epidemic and the decline in gross margin of business such as vocational schools and repetition; the sales, management, R&D, and finance expense ratios were 9.6%, 8.1%, 2.6%, and 1.2% respectively, up 2.4, 2.1, 0.1, and -0.6 percentage points from the same period last year. The increase in sales and management expenses was mainly due to the increase in employee remuneration; the company achieved a net interest rate of 14.1%, a decrease of 7.7 percentage points from the same period last year.
In February 2021, the company plans to acquire 100% of the shares of the private for-profit school Tianjin Foreign Tourism Vocational High School for 27 million yuan, and the project came to fruition in June. In March 2021, the company plans to acquire 60% of the shares of Henan Maotan Middle School, a private high school for 30 million yuan. The project came to fruition in April. The school is currently in the construction stage and is expected to be put into operation in spring 2022. In April 2021, the company signed an agreement with Huiwen Group and Beijing Huiwen Arts and Sports Education Company to establish a joint venture. It plans to cooperate to host schools with arts and sports characteristics. In June, the joint venture Shanghai Ked Arts and Sports was established (the company holds 51%) to specialize in training students with expertise in sports and art. The company continues to explore markets such as art and vocational education, broaden service margins, and advance the professional integration strategy in an orderly manner.
In July 2021, the “Opinions on Further Reducing the Work Burden and Out-of-School Training Burden of Students in Compulsory Education” was published. In the face of major changes in the industry environment, the company continues to explore the arts and vocational education markets, while the company's subsidiary Longmen Shangxue may fully transform or dispose of it. Along with the adjustment of the company's business strategy, the impact of industry policy changes on the company is expected to decline.
The company has many years of reputation and customer accumulation in the Shaanxi region, and the strategy of integrating workers from other places continues to advance. It is estimated that in 2021-2022, the company's net profit to the mother is 118 and 186 million yuan, corresponding to PE 22.2 and 14.1 times PE.
Risk warning: repeated COVID-19 pandemics, off-site expansion falling short of expectations, policy uncertainty, risk of impairment of goodwill.