EQS-News / 28/08/2020 / 10:38 UTC+8
Immediate release August 27, 2020
(Stock code: 2001. HK)
China New Higher Education Group Announces 2020 Interim Results
The Strategy of "Quality, Grow and Light" Drives the Development of the
Group
Strong Results Growth with the Number of Enrolled Students up 27% and
Adjusted Net Profit Rising by 46% to RMB330 Million
(August 27, 2020, Hong Kong) China New Higher Education Group Limited ("New
Higher Education Group", collectively called the "Group" together with its
affiliated companies; stock code: 2001.HK) is pleased to announce the
interim results for the six months ended June 30, 2020 (the period).
The Group's Position
· Practitioner of Collectivized School Operation: Established in 2005, the
Group has now formed a replicable collectivized school operation model.
· The propeller of application-oriented Universities: The Group is the
initiator and vice-chairman unit of the Association of Universities
(Colleges) of Applied Science of the MOE.
· Leader of High-quality Employment: The Group won the title of the Top 50
National Employment of the MOE, with an average employment rate of above
97%.
· Pioneer of Cross-regional Layout: The group started to operate schools
in different provinces since 2009, and has built up its school network in
7 provinces in China.
· Forerunner of Organic Growth: The Group's total number of student
enrollment increased by 27.0% YoY, with a continuous increase in student
enrollment and tuition fees.
Financial Highlights
· The total adjusted revenue amounted to RMB758 million, up 34.2% YoY;
· The adjusted revenue from principal business amounted to RMB705 million,
up 40.7% YoY;
· The adjusted net profit amounted to RMB330 million, up 46.0% YoY;
· The adjusted net profit attributable to owners of the parent amounted to
RMB299 million, up 48.9% YoY;
· A proposed final dividend of RMB0.042 per share, maintaining a payout
ratio of 30%
* The adjusted figures refer to the sum of the deferred tuition income
recognised in July and August 2020 as a result of supplementary lessons
provided in summer vacation for comparison purpose with the figures of the
same period of last year.
Business Highlights
· In 2019/20 academic year, the Group's student enrollment totaled over
118,700, up 27.0% YoY
· The Group accelerated the recovery of the prepayment in Xinjiang
potential acquisition, which totaled RMB137 million;
· The Group further acquired the remaining shares in Henan School and
Guangxi Schools, with the acquisition PEs lower than those in the first
acquisitions;
· Seizing the opportunity of government subsidies for training, the Group
acquired the stake in a training institution to further diversify the
sources of revenue;
· During the public health event period, the Group kept abreast of health
conditions of teachers and students on a real-time basis and collected
over 7.5 million pieces of health information on a cumulative basis, with
no epidemic infection happend; the epidemic resistance deeds of both
teachers and students were recognized across the industry and widely
covered by media;
· During the public health event period, the Group use TronClass platform
which can meet the online education demand of all the teachers and
students, with the number of clicks reaching over 300 million times;
· The Group changes the financial year to align financial results with the
teaching cycle.
Founder of the Company and Chairman of the Board Mr. Li Xiaoxuan said:
"Since our listing, we have gained much support and help from investors and
people from all walks of life. In the first half of 2020, in response to the
call of MOE to meet the challenge caused by the public health event to the
industry, the Group carried out online teaching through TronClass adhered to
the original teaching and class schedule, completing the teaching work for
the spring semester and realizing the principle of "Delay backing to school,
no delay in teaching.
Meanwhile, we also focus on the employment of new graduates. Through cloud
communication, cloud training, cloud guidance, cloud recruitment, cloud
graduation, cloud publicity, and cloud safety on 'Qiduo.net' employment
platform, and focusing on cooperation with famous enterprises, star
employment, and excellence training, all the schools have held over 220
online job fairs involving more than 5,670 enterprises; we also set up
internship bases in economically developed areas, explored quality resources
for internship and employment, and conducted in-depth cooperation with
Huawei, Alibaba, ByteDance and some other well-known enterprises.
Seizing the opportunities arising from favorable policies related to higher
education, vocational training, and online education, the Group has acquired
Yunnan Vocational School and quickly expanded to the field of government -
subsidized training, further realizing the diversification of the sources of
revenue. Facts show that 'Organic Growth + Value Investment' strategy has
been proven, with endogenous growth leading the industry, the Group will
further promote the external potential mergers and acquisitions.. In the
future, the Group's performance will continue to improve at high quality
with a huge room for a higher valuation."
Financial Analysis
In the event of public health, the Group was actively responded to the
emergencies in the following ways:
1) In response to national policies, it returned students the accommodation
fees for the period when they are not at school, and arranged supplementary
lessons in summer vocation at schools where face-to-face teaching conditions
permit;
2) It actively undertook its CSR, reducing or exempting rents for merchants
at school;
3) It continued to lower cost, strictly controlling administrative
expenditure while guaranteeing the input in teaching to ensure competitive
growth and reasonable returns to investors.
In the first half of 2020, the Group included income to be recognized during
the period but deferred to July and August 2020 in respect of the
supplementary lessons in summer vacation. As a result, the adjusted revenue
was RMB705 million, up 40.7% in the same period of last year, the adjusted
net profit was RMB330 million, up 46% from RMB226 million in the same period
of last year; the adjusted net profit attributable to owners of the parent
was RMB299 million, up 48.9% from RMB201 million in the same period of last
year. Total capital was RMB993 million, up 109% YoY, and the weighted
average interest rate continual optimized with a decrease of 20+bps YoY.
In the first half of 2020, the Group's 'High-Quality' strategy continued to
advance, and revenue continued to grow strongly; teaching investment
continued to increase, cost structure continued to optimize; profitability
continued to improve, shareholder returns continued to increase; capital
reserves continued to increase, and debt indicators continued to be
optimized.
Business Review
During the first half of 2020, the Group has made several achievements in
terms of improving the quality of teaching and employment, expanding income
and acquiring external resources, With 'Six Excellences' as the overall
strategic goals and adhering to the strategic direction of "Quality, Grow
and Light".
Value Investment: According to the market environment and its actual
development, the Group has established a development strategy with 'organic
growth as the mainstay and investment as the supplement'. In terms of
investment, based on the internal first then external principle, the Group
holds the strategy of first integrating existing schools, and subsequently
supplementing by excellent external mergers and acquisitions. Recently, the
Group further acquired minority interests in Henan School and Guangxi
Schools.
Organic Growth: During the first half of 2020, With 'Quality, Grow and
Light' as the overall strategic goals, the Group will further improve the
quality of teaching, employment, management and services, as well as expand
and diversify income . To make asset base lighter, the Group will study
demand more scientifically, use resources more efficiently, input more
reasonably and generate income more efficiently.
Improving online education quality and increasing international cooperation
After the outbreak of the public health event, the Group made use of the
online education platform TronClass and realized online teaching as
scheduled, with more than 300 million clicks recorded by the teaching
platform in the first half of 2020.
In terms of international cooperation, the Group has signed cooperation
agreements with overseas schools and institutions in the US, UK, Germany,
Canada, and Switzerland, broadening channels for overseas exchanges and
talent training for both teachers and students of the Group. Recently, the
Group reached an agreement with Swiss Education Group (SEG), the largest
hotel management education alliance in Switzerland with the highest
employment rate in the world.
Developing channels to maintain a high level of employment
In 1H 2020, the average employment rate of the Group's schools was higher
than the average level reported by schools peers in the provinces. Through
'Qiduo.net' employment platform, the Group provided students with massive
resources, corporation with famous enterprises, star employment, excellent
training and core process some other employment-related services; it reached
in-depth cooperation with famous enterprises, with an aggregate of 893
companies for cooperation with the Group and increased the rate of
internship at famous enterprises; the star employment rate rose by 20% YoY,
and 15 high-paying employment excellence classes for freshmen were to be set
up; it also optimized the core process of employment and established an
effective linkage mechanism to enhance the quality of employment services.
Meeting trends and improving the level of digitalization
At the teaching level: the Group uses the TronClass, an on-line and off-line
education platform, with AliCloud, Zhiyuan(??), and CC Video and other
enterprises, allowing the simultaneous access by more than 100,000 visitors
to satisfy the needs for large-scale online teaching and learning, realizing
the principle of 'Delay backing to school, no delay in teaching and
learning' during the public health event, which is covered by Ta Kung Pao
and China Education Online.
At the management level, the Group exploites the ERP management system,
NCCloud and business intelligence (BI) systerm, visualizing data such as
revenue, cost, capital, KPI, procurement and asset management.
At the service level, the Group's digital service platform has provided
teachers and students with around 20 million times of services related to
academic record, examinations registration, fees payment, teaching
evaluation, apartment maintenance and feebacks and the platform is still
updated when applied by other schools of Group. The Group kept abreast of
the health status of teachers and students during the pandemic, collecting
over 7.5 million pieces of health information on a cumulative basis,
supporting the work of teachers and students during the epidemic.
At the safety level, the Group also cooperated with Hikvision to deploy
smart security and safe campus platform, Setting up the Campus Security
System by technologies like face recognition, behavior recognition and big
data. The Group is appreciated by Education Department of Yunnan Province,
Education Department of Guiyang and Enshi Prefecture political and Legal
commissions.
Take Opportunities to Expand Revenue Sources
The Group actively responds to the call of the government, continues to
analyse on provincial policies, makes a good connection with the education
department, human resources and social security departments, and other
government departments, and provides vocational skill training services to
the public, making contributions to ensuring employment. Various schools
have set up special institutions, including continuing education colleges
and vocational education colleges, to select and deploy professional talent,
adjusted the structure of training programs, and vigorously promoted
government-subsidized training projects. The Group's six schools were
approved to be pilot 1+X certificate institutions by education authority. As
of June 30, 2020, it had provided government-subsidized training to about
3,500 people.
Acquisition of Yunnan Vocational School: To expand the training income
scale, the Yunnan Vocational School acquired by the Group in the first half
of this year is a diversified lifelong vocational education and training
institution with integrated businesses of accounting training, IT training
and adult corporate-sponsored training. With the acquisition PE of merely
6.4x, which is relatively cost-efficient in the industry. Through the
channels of the Group's colleges and universities, the Yunnan Vocational
School can make use of the existing resources of schools to open up a new
business and expand off-school training based on the existing student
training. Furthermore, it significantly increases the government-subsidized
training business scale, focusing on light assets and increase revenue.
Development of Light Assets
Cooperation and joint development: the Group will cooperate with large
state-owned investment or construction companies to integrate superior
resources, improve the quality of construction, and cooperate with companies
for building school infrastructure like student dormitories and commercial
facilities.
Socialization of asset investment: social resources have been introduced to
improve campus facilities and equipment, provide students with high-quality
services, and increase logistic income.
Sharing of the training center: it improves the quality of practical
teaching and integrates high-quality government resources by sharing
experimental and practical training bases, which improved the efficiency and
quality of resource utilization.
Outlook
Previously, the Group proactively acquired 5 colleges and universities and
completed the integration through abundant experience in collectivized
management. In 2020, it further acquired the remaining shares of school in
Henan and the minority shares in schools in Guangxi, with significant
integration and consolidation effects.
The Group's organic growth increases rapidly, and its newly acquired schools
develop fast, which boosts its financial strength and multiplies its capital
reserves. Under the development strategies of "Organic Growth + Value
Investment", the Group will continue to give full play to the advantage of
collectivized operation, replicate successful management experience, quickly
release the potential of newly invested schools, and quickly improve the
operational efficiency and profitability. Meanwhile, it will vigorously
promote potential external M&A projects, and further, promote the
implementation of the "Two-wheel Driven" business strategy.
Investment Highlights
With its strong collectivized management capacities, currently, the Group
has more than 118,700 students (including the number of expanded
enrollment), ranking third among the PRC higher education sector in the Hong
Kong stock market, and the quota of top-up programme in the 2020/21 academic
year will increase by more than 120%.
The Group proactively invested in 5 colleges and universities before and
after the listing where first-mover advantage is obvious. The average
acquisition cost of schools is far lower than the current market price,
accumulating extensive experience in mergers and acquisitions, restarting
the exploration of external potential mergers and acquisitions projects.
The Group has a strong post-investment management ability. The quality of
teaching and employment in the schools invested has improved significantly,
and the net profit has increased significantly. The compound annual growth
rate of the Group's net profit in the past 3 years had reached 56.5%.
In 2019, the Group's average tuition fee was RMB10,995, which is lower than
the average market level. The Group will continue to increase the investment
in teaching, experimental training and scientific research, continuously
enhance the quality of teaching, student employment and student experience.
The Group still has a huge potential for improvement in revenue in principal
businesses such as tuition and boarding fees in future.
Benefiting from the national "vocational skills improvement action" with
funding of RMB100 billion, the Group seized the opportunities to actively
provide vocational skills training services to the society, and carry out
government subsidy related training projects to further realize the
diversification of revenue.
Finally, the Group's development strategy with 'Organic Growth+ Value
Investment' as the mainstay and investment as the supplement has been
verified. The Group has a leading organic growth rate in the industry and
will accelerate the valuation of investment targets. The future performance
will continue to improve with high quality.
-End-
About China New Higher Education Group Limited:
China New Higher Education Group Limited is a leading private formal higher
education group in China with nearly 21 years of education industry
experience, specializing in providing higher education which focuses on
applied sciences. The Group endeavors to help each student maximize their
potential and live their life to the fullest. Since 2009, the Group has been
operating schools in different provinces and regions, and its current school
network covers 7 provinces in China, including Yunnan, Guizhou, Hubei,
Heilongjiang, Henan, Guangxi, and Gansu.
August 27, 2020 22:38 ET (02:38 GMT)
