Revenue growth, profit decline, sales expense rate increases rapidly
The company's 2021H1 revenue was 2.001 billion yuan (+ 31.9%), an increase of 9.9% over 2019H1, and a net profit of 233 million yuan (- 3.9%), 25.4% less than 2019H1. The adjusted net profit is 301 million yuan (+ 41.8%). The increase in income was mainly due to the increase in the number of new trainers, with 81900 new 2021H1 trainers (+ 34.7%). The decline in net profit was due to a sharp increase in sales expenses, which were 464 million yuan (+ 26.1%) for 2021H1 sales, an increase of 45.3% over 2019.
The rates of sales, management and financial expenses are 23.2% (- 1.0%), 12.6% (- 4.9%) and 4.0% (- 0.6%), respectively.
The business recovers gradually, and the expansion speed slows down.
Judging from the number of new trainers, the two traditional businesses of New Oriental Education & Technology Group and Xinhua computer have improved compared with 2020H1, but they have not yet returned to the pre-epidemic level. On the other hand, Wantong Auto repair has achieved a great increase in the number of new training in the case that the new major has expanded the scope and base of potential enrollment. In addition, Omi.
Strange, delicious College, Huaxin Zhiyuan, Aumandi and other new business training person-times have exceeded the same period in 2019. Judging from the new campus. 2021H1 New Oriental Education & Technology Group, Wantong Auto repair and Omichi added 5 and 3. 4 outlets respectively; Xinhua computer, Huaxin Zhiyuan and delicious College did not add new outlets, and Aumanti had a total number of outlets.
Downgrade income and net profit forecasts and maintain "buy" rating
The lower-than-expected growth rate of the company's performance and the increase in enrollment costs may be due to the slow slope climbing speed of the utilization rate of new schools and the increased pressure of enrollment. It is predicted that the income of the company from 2021 to 2023 is 43.73,48.17 and 5.212 billion yuan respectively, and the net profit is 6.01,6.79 and 765 million yuan respectively.
In the follow-up, if the company makes positive progress in the continuous optimization of curriculum and student structure, the restoration of high growth rate of new and old brand stores, and the acquisition of vocational qualifications, the performance growth is expected to pick up significantly. Maintain the "buy" rating and downgrade the reasonable valuation range to HK $9.79 to HK $10.46. The Sept. 7 closing price of HK $9. 42 corresponds to a forecast PE of 28. 6% for 2021-2023. 25.3 and 22.5 times.
Risk hint
The new school opening and enrollment are not as expected; there are negative events in school operation and management.