China's Xinhua Education (02779.HK): Steady increase in endogenous undergraduate credits +19% in the 20/21 academic year

興業證券 · Sep 8, 2020 00:00 · Researches

集团20H1总收益+8.8%达 29.3 亿元，毛利同比+18.9%达17.4 亿元，经调整净利增16.9%。集团总收益（包括收入及其他收益）+8.8%至29.3 亿元；不考虑临床医学院及红山学院利润并表等其他收入影响，公司期内收入+7.6%达24.5 亿元。拆分来看，学费收入+15.3%达23.5 亿，住宿费收入受上半年退费影响，同比-58.3%至0.1 亿元。经调整净利润+16.9%达1.8 亿，利润率为73.6%。

全日制在校人数+6.4%至39879 人，20/21 学年招生计划增7%。在校生人数-1.7%至43,923 人，但全日制人数同比+6.4%，本科学生占比逐年增至78%。

学额：20/21 年11,164 人（不包括继续教育及中职），同比+7%，其中本科为10,764 人，同比+19%。新华学院本科学额增19%至6400 个，其中专升本学额增450%至1100 个。红山学院本科学额增34%至3259 个，其中专升本学额实现零的突破至830 个。学费:疫情背景下，公司主要本科学校均维持稳定。

主营业务成本降幅明显推高毛利率，唯期权费用摊销推动行政费用率显著增长。公司销售及分销成本同比-33.1%。行政开支+98.4%，主要由于以股份为基础的付款开支及为适应办学规模扩大招募管理人才而增加；若不考虑购股权费用及汇兑损失后，公司行政开支同比+17.9%。集团负债率提升10pct 到16.97%，主要由于20H1 提取了3.66 亿人民币的贷款。期内账上现金及等价物达11 亿，预计9 月份开学将有 5-6 亿的现金流入。

我们的观点：短期看，集团内生稳健增长，扩招背景下20/21 年专升本学额大幅增长。此外，公司红山及临床医学院上半年已贡献2460 万，较去年662万亏损明显改善，预计两学校的利润并表可为公司全年收益提供贡献显著。

中长期看，公司学费整体偏低，增长潜力大。此外，新校区有望于21/22 学年前投入使用，可释放校园容量，提振招生实力。此外，公司积极拓展教辅服务丰富收入来源。我们调整公司20-22 年收入预计至4.97/5.8/6.5 亿元，同比+13.6%/+17.6%/+11.6%；净利润预计达3.1/3.5/3.9 亿元，同比+13.7%/+13.3%/+11.8%。维持目标价3.2 港元，对应20/21 年PE 为15/13 倍。

公司现价对应20/21 年PE 为11/10 倍，估值较低，维持“买入”评级。

风险提示：1）收购整合不达预期；2）中国教育政策变动；3）招生人数不达预期；4）公司收入来自中国少数城市；5）VIE 架构政策风险。

The total revenue of the Group 20H1 was +8.8% to 2.93 billion yuan, gross profit of +18.9% to 1.74 billion yuan over the same period last year, and adjusted net profit increased 16.9%. The Group's total revenue (including revenue and other revenue) was +8.8% to $2.93 billion; excluding other revenue impacts such as the combined profits of the School of Clinical Medicine and Hongshan University, the company's revenue during the period reached $2.45 billion by +7.6%. Looking at the split, tuition revenue was +15.3% to 2.35 billion, and accommodation fee revenue was affected by refunds in the first half of the year, which was -58.3% over the same period last year to 0.1 billion yuan. Adjusted net profit of +16.9% reached 180 million, with a profit margin of 73.6%.

The number of full-time students enrolled was +6.4% to 39,879, and the enrollment plan for the 20/21 school year increased 7%. The number of students enrolled was -1.7% to 43,923, but the number of full-time students was +6.4% year over year, and the proportion of undergraduate students increased to 78% year by year.

Number of students enrolled: 11,164 students in 20/21 (excluding continuing education and middle career), +7% year on year, including 10,764 undergraduate students, +19% year on year. The number of undergraduate students at Xinhua University increased by 19% to 6,400, of which 450% increased to 1,100. The number of undergraduate students at Redhill College increased by 34% to 3,259, of which the number of undergraduate programs reached zero to 830. Tuition fees: In the context of the pandemic, the company's major undergraduate schools have remained stable.

The decline in the cost of the main business clearly boosted the gross profit margin, while amortization of options expenses alone contributed to a significant increase in the administrative expense ratio. The company's sales and distribution costs were -33.1% year-on-year. Administrative expenses were +98.4%, mainly due to the increase in share-based payment expenses and the recruitment of management personnel to adapt to the expansion of the scale of running schools; without considering share option costs and exchange losses, the company's administrative expenses were +17.9% compared to the same period last year. The group's debt ratio increased by 10pct to 16.97%, mainly due to loan withdrawals of 366 million yuan in 20H1. Cash and equivalents on account reached 1.1 billion during the period, and it is estimated that there will be an inflow of 5-6 billion dollars in cash from the beginning of school in September.

Our view: In the short term, the number of students enrolled in the group increased steadily, and the number of college upgrades increased dramatically in 20/21 in the context of enrollment expansion. Furthermore, the company's Hongshan and School of Clinical Medicine contributed 24.6 million in the first half of the year, a significant improvement from last year's loss of 6.62 million. It is expected that the combined profit of the two schools will contribute significantly to the company's annual revenue.

Looking at the medium to long term, the company's overall tuition fees are low, and there is great potential for growth. Furthermore, the new campus is expected to be put into use before the 21/22 school year, freeing up campus capacity and boosting enrollment capacity. In addition, the company is actively expanding the sources of revenue from teaching support services. We adjusted the company's revenue forecast for 20-22 to 497/55/ 650 million yuan, +13.6%/+17.6%/+11.6% year on year; net profit is expected to reach 31/35/ 399 million yuan, +13.7%/+13.3%/+11.8% year on year. Maintain the target price of HK$3.2, which corresponds to 15/13 times PE in 20/21.

The company's current price corresponds to 11/10 times PE in 20/21. The valuation is low, maintaining the “buy” rating.

Risk warning: 1) acquisition integration falls short of expectations; 2) changes in China's education policy; 3) enrollment numbers fall short of expectations; 4) company revenue comes from a few cities in China; 5) VIE structure policy risks.

The translation is provided by third-party software.

The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.

中国新华教育(02779.HK)：内生稳健增长 20／21学年本科学额+19%

China's Xinhua Education (02779.HK): Steady increase in endogenous undergraduate credits +19% in the 20/21 academic year

Risk Disclaimer

Statement