Total enrollment in self-run schools increased by 12 per cent to about 67162 in the 202021 academic year. The figures are in line with expectations, but the student structure is slightly lower than expected. Due to the limitation of existing capacity, the number of students in Dongguan Guangzheng Experimental School has only increased slightly, and its tuition fee is the second highest among all the schools under the company. Wise Vision Education is now valued at 9.7 times forecast 2021 earnings, lower than the K12 education industry average of 15.6 times, and the company's PEG at 0.4 times, much lower than the industry average of 0.7 times. We find the company's current unreasonable undervaluation attractive. The recent fluctuations in the company's share prices are mainly due to market concerns that the recent policy reaffirms the non-profit nature of private compulsory education and its impact on the structure of VIE. As the related concerns were mentioned earlier than in the regulations on the implementation of the Private Education Promotion Law (revised draft) (draft for soliciting opinions) published in November 2018, we believe that the company's share prices have reflected market concerns. Repeat the purchase.
The total enrollment is in line with expectations. The company recorded a total enrollment of 71362 students at the beginning of the term in 2020max 21.
Excluding 4200 new students from independent third-party schools managed by the company, total enrollment in the company's private schools increased by 12 per cent or 7046 to 67162, in line with our expectations.
The student structure is slightly lower than expected. The increase in total enrollment mainly benefited from the strong growth in the number of students at Huizhou School, which was close to saturation to 14000. Due to the limitation of existing capacity, Dongguan Guangzheng Experimental School has only recorded a slight increase. The company has not yet received fire prevention approval for its new campus building, so it is unable to expand its dormitory. As the tuition fee of the Dongguan school is the second highest of all the schools under the company, and the distribution of students is lower than expected, we will slightly reduce the average tuition income by 2%. We have also lowered our total enrollment forecast for 2022 by 2%.
School management service. The company (through wholly foreign-owned enterprises) has reached management service agreements with about 10 kindergartens and primary schools in Dongguan. The company will charge the management school a fixed fee of about RMB 1000 per student each year as a management fee for providing teacher training, student entrance training and advice on school decoration.
The company aims to increase the number of students by 30% in 2022.
Keep buying. We cut our revenue forecast for 2021 Universe 22 by 1% and net profit forecast by 3% and net profit forecast by 7%. Taking into account the updated earnings forecast and the dilution effect after the company's rights issue, we have lowered our forecast for 2019-22 earnings per share compound annual growth rate from 28% to 25%. The target price was lowered from HK $6.38 to HK $5.61, corresponding to a price-to-earnings ratio of 17.4 times, or 0.7 times PEG, for 2021.
Catalyst: (1) the government approves the vocational training school project; (2) the policy worry is eliminated.
Risks: (1) policy risks; (2) increase in teachers' costs.