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思考乐教育(01769.HK):2021收入利润有望快速增长 精细化运营实现长久健康发展

Thinking Music Education (01769.HK): Revenue and profit are expected to grow rapidly in 2021, refined operation to achieve long-term healthy development

天風證券 ·  Apr 3, 2021 00:00

  On March 31, 2020, Thought Fun Education announced the results announcement for FY2020 (2020.1.1-2020.12.31).

FY20 Shingle Education's revenue was 749 million yuan, an increase of 5.3% over the previous year.

Specifically, the income from academic exam preparation courses was 739 million yuan (98.70%), an increase of 6.19% over the previous year; the income from quality education courses in elementary schools was 0.1 billion yuan (1.30%), a decrease of 35.91% over the previous year.

The increase in revenue was mainly due to the company's total number of students enrolled and the number of tutoring hours. The main reason was that the total number of learning centers increased from 100 in 2019 to 152 in 2020. However, this increase was partly offset by a reduction in the average tuition fee per tutoring hour for regular courses from RMB 82.3 in 2019 to RMB 73.5 in 2020.

Cash and equivalent items in the company's balance sheet as of the end of 2020 were $443 million.

FY20's main business cost was 489 million yuan, an increase of 19.89% over the previous year.

FY20 gross profit was 261 million yuan, down 14.30% year on year; gross margin was 34.8%, -7.9 pct year on year.

The main reason for the decline in gross margin is that (i) the newly opened learning centres in 2019 and 2020 were in a climbing period, and the benefits generated were relatively limited, while the associated costs (such as amortization of usage rights assets, salary and benefits costs associated with such learning centers) were still fixed; and (ii) during the pandemic, the amount of additional expenses generated by online classes was quite large.

The management fee was 152 million yuan, an increase of 15.2% over the previous year, and the management cost rate was 20.34%, an increase of 1.75 pct over the previous year.

The main reason for the increase in management expenses was the expansion of the company's learning center network and business growth, which increased the salaries and benefits of administrative staff by RMB 0.4 billion. However, this increase was partly offset by a reduction of RMB25.8 million in non-recurring listing expenses resulting from the company's stock listing on the Stock Exchange in June 2019 as of 2019.

Sales expenses amounted to 23 million yuan, an increase of 7.6% over the previous year, and a sales expense ratio of 3.10%, an increase of 0.07 pct over the previous year.

The main reason for this increase is (i) the expansion of the learning center network leading to an increase in our customer service staff; and (ii) the increase in advertising and exhibition expenses related to parent seminars and lectures organized by the Company to promote its brand and services after the pandemic. However, this increase was partly offset by a reduction in operating activity-related expenses.

R&D expenses were 57 million yuan, an increase of 26.1% over the previous year, and the R&D cost rate was 7.60%, an increase of 1.25 pct over the previous year.

The increase in R&D expenses was mainly due to an increase in the number of R&D personnel, which led to an increase in salaries and benefits of RMB 208.2 million.

Financial expenses amounted to 36 million yuan, an increase of 52.9% over the previous year. This was mainly due to an increase of RMB 101 million in interest expenses on leasing liabilities and an increase of RMB 0.025 billion in borrowings.

Net profit after FY20 adjustment was 97 million yuan, a year-on-year decrease of 28.9%; the adjusted net interest rate was 12.92%, a year-on-year decrease of 6.19 pct.

Give a buy rating.

Lower the profit forecast and give it a buy rating. K12's training assets have a lot of room to grow, think and enjoy the Greater Bay Area's demographic dividend. The management team is extremely motivated, and the partnership system is fully motivated. Due to repeated epidemics and the rectification of education and training in the first half of 2021, we lowered the company's net profit forecast. Net profit in '21 was lowered from 280 million yuan to 190 million yuan, net profit in '22 was 260 million yuan, and PE was 21x and 16x respectively.

Risk warning: the opening speed is not as fast as expected; enrollment falls short of expectations; education and training industry policies have not yet been implemented

The translation is provided by third-party software.


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