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希望教育(01765.HK)点评:并购持续推进 强劲内生增长可期

Hope Education (01765.HK) comments: mergers and acquisitions continue to promote strong endogenous growth is expected

申萬宏源研究 ·  Jul 21, 2021 00:00

Hope Education announced the acquisition of a 49% stake in the School of Entrepreneurship, Inner Mongolia University on July 20, 2021, with a consideration of 800 million yuan. Because the company has previously become the school sponsor, and acquired a 51% stake. Therefore, after the completion of this acquisition, it is hoped that Education will complete 100% control of the Entrepreneurship School of Inner Mongolia University. Since the 51 per cent stake previously acquired by the company did not incur acquisition fees, we believe that the consideration of 800 million actually corresponds to a 100 per cent stake in the Entrepreneurship School of Inner Mongolia University, valuing the merger at about 8.4 times EV/EBITDA and 11.2 times earnings.

There is an urgent need for conversion, and there is plenty of room for students to grow up in M & A schools. The Entrepreneurship College of Inner Mongolia University, founded in 2008, is located in Hohhot, Inner Mongolia Autonomous region. It has 6 secondary colleges and 28 undergraduate majors. The school currently has about 8554 students, and although the school is in the stage of conversion of an independent college, the enrollment plan of the School of Entrepreneurship of Inner Mongolia University for the 22nd academic year has not been affected, with an increase of 8.5% to 2220 compared with the same period last year. In 2020, the School of Entrepreneurship of Inner Mongolia University had an income of 148 million yuan and a net profit of about 44.76 million yuan, an increase of 36 percent over the same period last year. In addition, the school has 504 mu of land and 247 mu of its own land. Assuming that each mu of land can accommodate 24 students, we expect that the Entrepreneurship College will be able to accommodate about 12000 students, and there is plenty of room for student growth.

The scale of students in school has increased steadily. Hope Education announced the overall enrollment plan of about 95000 students for each college in the 22nd academic year (fiscal year 22), an increase of 11% over the same period last year. Assuming that the enrollment rate remains at the level of 20pm in the 21st academic year, the number of new enrollment in the group will also increase at the same time. As a result of the successive consolidation of the Group's newly acquired Gongqing College of Nanchang University and Nanjing Jinken College, we expect the number of students in the company to increase from about 195000 in the 21st academic year to 234000 in the 22nd academic year, an increase of about 20 per cent over the same period last year. With the continuous transformation of the company's four independent colleges (excluding the Gongqing College of Nanchang University and the School of Entrepreneurship of Inner Mongolia University), the group's undergraduate enrollment plan dropped by about 8000 in the 22nd academic year. Therefore, the increase in enrollment plans will mainly come from the increase in the number of specialties. As the college tuition fee is lower than the undergraduate tuition fee, we expect the group's average tuition fee to drop 1.4% year-on-year to about 13005 yuan in the 22nd academic year. Therefore, we expect the Group's revenue in fiscal year 22 to reach about 2.885 billion yuan, an increase of 18% over the same period last year. As the Ministry of Education mentioned in the implementation Plan for accelerating the conversion of Independent Colleges issued in May 2020 that it will support the enrollment plans of independent colleges that are completed on schedule, therefore, we expect that the group's undergraduate enrollment plan for the 22nd 23 academic year (fiscal year 23) will resume, and the corresponding enrollment will increase by 13% to 265000 compared with the same period last year. At the same time, we expect the group's revenue to reach about 3.468 billion yuan in fiscal year 23, with a three-year compound growth rate of 30.3%.

Keep buying. We expect that education will continue to maintain strong endogenous growth and expand rapidly through mergers and acquisitions and excellent post-investment integration capabilities. Therefore, we maintain the Group's adjusted net profit for fiscal year 21-23 unchanged, which is RMB 831 million, RMB 991 million and RMB 1.337 billion respectively. The corresponding forecast for earnings per share is 0.11 + 0.12 + 0.17 respectively. We maintain our target price at HK $3.93, which is 146% higher than the current price and keep buying.

The translation is provided by third-party software.


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