FY20H1 saw education revenue of 932 million yuan, an increase of 11.56% over the same period last year.
On April 27, wise vision education issued a 2020H1 performance announcement. The income of FY20H1 tuition and accommodation fees was 671 million yuan (accounting for 69.3%), an increase of 15.86% over the same period last year. The income from supporting services was 261 million yuan (30.7%), an increase of 1.87% over the same period last year, mainly due to the increase in the overall enrollment and the increase in tuition and accommodation fees per student.
The cost of FY20H1's main business was 497 million yuan, an increase of 8.7% over the same period last year. Specifically, employee costs were 306 million yuan, up 1.90% from the same period last year; depreciation and amortization were 85 million yuan, up 25.4% from the same period last year. FY20H1 gross profit was 436 million yuan, up 15.0% from the same period last year; gross profit margin was 46.7%, + 1.4 pct year-on-year; other income increased by 408% to 50 million yuan over the same period last year; and other income and losses were 39.8 million yuan.
The management fee was 140 million yuan, an increase of 6.9% over the same period last year, and the management expense rate was 15.0%, which decreased 0.7pct over the same period last year.
The sales cost was 20 million yuan, a decrease of 19.3% over the same period last year, and the sales expense rate was 2.2%, a decrease of 0.8pct over the same period last year.
The financial expenses were 52 million yuan, an increase of 34.82% over the same period last year. Income tax expenditure totaled 62 million yuan, an increase of 88.8% over the same period last year. The adjusted net profit was 288 million, an increase of 33.2% over the same period last year, and the adjusted net profit margin was 30.92%, an increase of 5.02pct over the same period last year.
The number of students in the 1920 academic year was 60000, an increase of 16.7% over the same period last year. The new schools of Bazhong, Yunfu and Shunde currently have a total capacity of 140000. As of February 29, 2020, the total enrollment of Wisdom was 60116, including students from three new schools at the beginning of the 20-year term in 1919.
Wise school features: wise vision school is a boarding school with students' dormitory. In order to promote the all-round and high-quality development of students, wise vision offers a series of school-based elective courses, including sports, art, music and Chinese culture courses. Wise students have made great progress in the fields of basketball, track and field, martial arts, music, dance and Chinese calligraphy. For example, Dongguan Guangming Middle School men's basketball team has won a number of municipal and provincial championship awards in the past, and won the third runner-up in the 2019 national junior and high school basketball competition. Student enrollment rate: in the 2018 and 2019 academic year, more than 90% of the high school graduates of the wise vision school were admitted to Chinese universities, and more than 50% of the high school graduates of Guangming Middle School in Dongguan were admitted to China's first-class undergraduate universities as recognized by the Guangdong University Application and admission guidelines issued by the Guangdong Education examination Institute.
Wise View focuses on Daya Bay and adopts a two-pronged expansion strategy: I) expand school capacity: the total capacity of existing schools is estimated to be about 70,000 students in the 20 academic year 2019. With a number of government approvals, assuming that all the land available for expansion in existing schools and new schools under construction is fully utilized, it is estimated that the maximum capacity may be expanded to more than 140000 students. II) Open more new schools: in order to maintain the growth momentum of insight in the future, in addition to expanding the capacity of existing schools, Wisdom will continue to open new schools by operating relatively small potential light asset schools in Guangdong Province, and to build relatively large new schools on sites that have been purchased for educational purposes with land use rights.
At present, two new schools are under construction, with a total educational land of 400mu and a maximum capacity of about 15500 people.
The company has signed framework agreements with the local governments of Guangzhou and Zhaoqing in Guangdong Province on the proposed cooperation in the development of boarding schools in Guangzhou and Zhaoqing.
Maintain profit forecasts and hold ratings, founded in 2003, is one of the largest private education groups operating high-end primary and secondary schools in South China in terms of enrollment. Wise Vision School focuses on students from middle-class or above families in China. Compared with the 2018 peg 19 school year, the total enrollment in the 2019 peg 20 school year increased by 10.47% to 60116 students, and the total student capacity of the wise vision school increased by about 11.1% to 70000 students. We expect the company's FY20-21 EPS to be HK $0.31 and HK $0.39 respectively, and its PE to be 9x and 7x respectively.
Risk hint: enrollment is not as expected; regulations on the implementation of the people's Promotion Law have not yet landed.