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中国东方教育(667.HK):疫情干扰致利润承压 看好职教龙头长期价值

China Oriental Education (667.HK): profit pressure caused by the interference of the epidemic situation is optimistic about the long-term value of vocational education leaders.

國元國際 ·  Sep 9, 2021 00:00

Main points of investment

Under the disturbance of sporadic outbreaks, 21H1's revenue has rebounded steadily, and the profit end is under pressure:

2021H1 achieved revenue of 2 billion yuan, + 31.9% year-on-year, + 9.9% compared with the same period in 19 years, and recorded a net profit of 230 million yuan,-3.9% year-on-year, and-25.4% compared with the same period in 19 years. After excluding exchange losses and equity incentive fees, the adjusted net profit is 300 million yuan, + 41.8% year-on-year. The revenue of the cooking / computer / automobile sector in the first half of the year was + 32% / + 20% / + 43% respectively compared with the same period last year, which was 13.6% higher than that of + 7.9% in the same period in 19 years.

Actively expand the campus network, profit margin recovery depends on the growth of enrollment and the improvement of the utilization rate of the new campus:

2021H1's gross profit margin and net profit margin were 55.3% and 11.6%, respectively, down 2.2 and 4.3 percentage points from the same period in 2020. The number of campus network outlets has increased by 12 compared with the end of 2020. The reasons for the pressure on the profit end: (1) the company actively expanded the campus network in the first half of the year, and the fixed investment on campus, such as rent and teachers' salaries, was rigid. The 20H1 base is low, when the outbreak led to the closure of the campus, saving related expenses. (2) the rhythm of enrollment is disturbed by sporadic epidemic situations, the utilization rate of the new campus is low, and the scale effect does not lead to the decline of the overall gross profit margin. At present, the utilization rate of the cooking sector is about 75%, information technology is about 75-80%, and Wantong is less than 70%. (3) the impact of sporadic outbreaks in various places exceeded the original expectations, so the company's sales expenses were on the high side in the first half of the year, and there was still room for future sales expenses to be reduced.

The proportion of long-term training has increased, the combination of skills and academic qualifications has been steadily improved, and the employment rate recommended by 21H1 is about 95%:

Among the average training attendance, the proportion of three-year long training has increased from 28 per cent in 19 years to 45 per cent of 21H1, reaching 64700, or + 46 per cent compared with the same period last year. During the period, the company has a total of 43 schools with academic licenses (39 last year), of which 7 are qualified as senior technicians. The schools that need academic license are mainly more than 120 long-term training-based cooking / computer / automobile three traditional brand schools, so the coverage rate of academic license has reached 1x3. The improvement of the proportion of education and long-term training will optimize the operational stability of the company.

Maintain the buy rating with a target price of HK $11.3:

Our point of view: the policy strongly encourages private vocational education, which has positive social value. Under the short-term epidemic disturbance, the company's profit end is under pressure, and the buyback behavior shows confidence. We believe that under the positive background of the policy environment, as the leader of private vocational education, the company will maintain good enrollment ability and industry leading position by virtue of brand precipitation and school quality, and have long-term investment value. Revenue from 21e to 23e is expected to be 4237 / 4879 / 5598 million yuan respectively, an increase of 16.1% / 15.1% / 14.7% over the same period last year, and the net profit of returning home is 742 / 892 / 1067 million yuan respectively, an increase of 188.1% / 20.2% / 19.6% over the same period last year. The target price is HK $11.3 and the buy rating is maintained, corresponding to about 23 times 22e PE.

The translation is provided by third-party software.


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