FY2022H1 performance overview: For the six months ended February 28, 2022, the company achieved revenue of 1,526 million yuan (+29.0% year-on-year); adjusted gross margin was 52.8% (-330 bps); adjusted net profit was 453 million yuan (-17.1% year-on-year). The decrease in adjusted net profit was mainly due to the reversal impairment loss of 180 million yuan in the previous period. There was no such thing in the current period, which offset profit growth for the current period; adjusted net interest rate was 29.7% (year-on-year - 1649 bps), basic profit per share 0.054 million yuan Yuan, no dividends.

The school network further expanded, and the number of new students enrolled reached a new high: as of FY22H1, the company had 23 schools, 10 undergraduate schools, 11 senior vocational and 2 technician colleges. The total number of students enrolled was 232,200, an increase of 19% over the previous year. The increase in numbers was mainly due to the company's endogenous growth, the merger of Thailand's Sinawa International University, and the self-established Baiyin Hope Vocational and Technical College and Xingtai Applied Technology Vocational College put into operation in September 2021. In the 2021/2022 academic year, the company enrolled a total of 82,600 new students, and the bed utilization rate increased slightly from 86.5% to 86.8% to increase investment in running schools and strengthen the quality of teaching: the company FY202H1 focuses on increasing investment in running schools, improving the conditions for running schools, and increasing capacity. Company expansion expenses increased 67% year on year to 1,549 million yuan, teaching expenses increased 41% year on year to 585 million yuan, of which teacher remuneration expenses also increased 48% to 388 million yuan. In 2021, the company's colleges introduced 1,532 teachers, built 39,300 square meters of training space, 82 training centers, 360 smart classrooms and more than 300 standard examination rooms, remodeled 379 multimedia classrooms, and invested more than 20 million yuan to upgrade the academic affairs management system to provide students with a better teaching and living environment.

Internal and external two-wheel drive boosts rapid performance growth: Currently, the total land area of colleges and universities in the company is 13,400 mu, the housing area exceeds 4 million square meters, and 55% of the land has not yet been developed and used. Currently, the average number of students in the school is 11,000. It is estimated that the average number of students in the school still has room to grow by about 1 times based on land utilization. Furthermore, the synergies between domestic and foreign schools are beginning to show, with the company's subsidiaries Indie International University in Malaysia and the University of Shinawat in Thailand increasing their FY202H1 enrollment by 43% and 24% respectively. In addition, the company also has close partnerships with many other overseas institutions to provide students with diverse options for studying abroad.

The target price is HK$1.0, maintaining the purchase rating: The company is currently the company with the largest number of secondary schools in Hong Kong stock higher education companies. The ability to integrate mergers and acquisitions has been confirmed. Judging from the current land reserves, there is still plenty of room for growth for endogenous growth alone. Adjusting the company's target price of HK$1.0, corresponding to the forecast PE for 21/22 is 9.7x and 8.2x, respectively, with a 112.8% increase in the recent closing price.