FY2021 performance Overview: for the year ended August 31, 2021, the company achieved main business income of 882 million yuan, up 16% year on year; gross profit 471 million yuan, up 33.1% year on year; gross profit 53.4%, down 600BPS; net profit 144 million yuan, down 53.2% year on year; adjusted net profit 299 million yuan, down 11.4% year on year The main adjustment items are: 1) Huali College transfer compensation fee of 150.8 million yuan; 2) exchange loss (about 18.2 million yuan in fiscal year 2021 and 5.5 million yuan in fiscal year 2020); 3) fair value income of investment property (about 14.6 million yuan in fiscal year 2021 and 2.8 million yuan in fiscal year 2020); 4) discounted interest payable on the conversion of Huali College is about 1.2 million yuan. The final dividend per share is 0.0411 yuan.

The growth in the number of students is in line with expectations, and the utilization rate of Yunfu campus has climbed significantly: as of August 31, 2021, the total number of students in the company's three schools was 45000, an overall year-on-year increase of 12.3%. Separately, there are 18300 students from Huali College (YOY/+3.0%), 17200 students from Huali Vocational College (YOY/+19.5%), and 9500 students from Huali Technical College (YOY/+19.7%). In terms of per capita tuition fees, in fiscal year 2021, Huali College / Huali Vocational College / Huali technician College increased by 7.8% and 2.9% respectively compared with the same period last year. In terms of campus utilization, Zengcheng campus has tended to be saturated to 92.7%, year-on-year-30BPS, Yunfu campus utilization has increased significantly, has reached 65.3%, an increase of 408BPS.

The land reserve of the company is sufficient, and the endogenous growth is guaranteed: the first phase of Jiangmen Binhai Campus has been put into operation in September, 21. At present, it has built a building area of 180000 square meters, with a capacity of 4000 people. the second phase of the project is expected to be completed and put into use in September 2022, and the capacity of 8000 students is expected to be increased. After the follow-up construction is fully implemented, the total area of the Binhai campus will reach 1258 mu. The total capacity will reach 25000. At present, if all three campuses owned by the company are completed, the maximum capacity will be about 100000 people, ensuring that the conversion of the company's Huali College and the expected increase in the number of students under the policy support of Huali Vocational College will not be affected by the capacity.

The target price is HK $2.50 and the purchase rating is maintained: Huali College has successfully decoupled from 21max in the 22nd academic year and is expected to pay 34 million yuan less brand management fee in the 22nd academic year, and will no longer pay the brand management fee in the 26th academic year, which will directly enhance the company's profitability. at present, the company has made great efforts to develop vocational education and training business, actively respond to national policies, and is expected to achieve rapid growth. Adjust the company's target price of HK $2.50, corresponding to the 2021 PE forecast of 6.9x and 5.6x for 2022, up 106.6 per cent from the recent closing price.