Strong Organic Growth with Student no. increased by 72%
Total income increased by 34% to RMB 730 mn
(29 March 2019, Hong Kong) China New Higher Education Group Limited ("New Higher Education Group", together with its subsidiaries, the "Group"; stock code: 2001.HK) is pleased to announce the consolidated annual results for the year ended 31 December 2018.
- Total revenue amounted to RMB728 million, up 34.0% yoy
- Gross Profit amounted to RMB286 million, up 25.9% yoy
- EBITDA amounted to RMB439 million, up 34.2% yoy
- Adjusted net profit increased 20.3% to RMB285 million, adjusted net profit margin of 39.2%
- Proposed final dividend of RMB0.019 per share (HK$0.0222), combined annual dividend of RMB0.046 per share (HK$0.0532).
- Leading organic growth among peers, total student enrollment no. of the four schools established or invested before IPO growed 15.0% averagely
- Total student enrollment no. reached 93,548 in 2018/19 academic year, compared to 54,290 in 2017/18 academic year, increased by 72.3% y/y (including newly invested schools)
"In 2018, the Group steadily embarked on a new journey of another round of entrepreneurship. Listed for around 2 year, with the support of investors and stakeholders, we have braved the storms and faced the world in the capital market and have taken solid steps on the new journey." Founder of the Company and Chairman of the Board Mr. Li Xiaoxuan said.
Benefiting from our cross provinces expansion and pro-investment consolidation capability, total student enrollment no.of the Group, both organic and inorganic, maintaining strong growth trend. We have accumulated years of collectivized school operation experience, enabling us successfully entering into 7 provinces, with the widest footprint. The new schools have achieved remarkable improvement.
Looking back, the Group's revenue increased 35.5% to RMB562 million. Tuition fee income increased 34.6% to RMB512 million, reflecting the increased in both student no. and tuition fee. Boarding fee increased 45.3% to RMB49 million reflecting the increased in both student no. and boarding fee.
Gross profit increased by 25.9% to RMB286 million y/y. The gross profit margin decreased to 51.0% from 54.9%, primarily due to the the increase in the Group's teaching investment, improve student's experiences and the consolidation results from new schools.
Adjusted net profit increased 20.3% to RMB285million y/y, excluding the impairment allowance made for prepayment included in other non-current assets.
Cash on hand
As at the end of 2018, the Cash on hand of the Group amounted to RMB413 million.
For the year ended 31 December 2018, our capital expenditures were RMB415 million, including the construction of buildings and school facilities at the new campus, prepaid rental for the land lease and purchase of equipment and software by the schools of the Group.
On 31 December 2018, the Group operated and invested 6 higher education institutes in six
provinces in mainland China with nationwide student enrollment coverage. Our students attended 84 general undergraduate majors and 76 general junior college majors. Total student no. reached 93,548, representing an increase of 72.3% (excluding Gansu College). Furthermore, the Group has applied to be a joint school sponsor of Gansu College and is expected to complete its new campus relocation in September 2019.
Job-oriented nurturing model
As of 31 December 2018, 1,211 students had participated in the Group's excellent apprenticeship
Training.The starting salary of the 2017 fresh graduates from the College of Excellence at Yunnan School is RMB5,601 per month, which is way above market standard, and its employment rate is 100%.
Integration of Industry and Education, Cooperation between Schools and Enterprises
For the schools under the Group, they established a profound school-corporate cooperation with
many well-known companies including Microsoft, Huawei, Alibaba, Lenovo, Jingdong, Midea,
Gree, Geely, 360, Tedu, iFlytek, China Union, Chinasoft International, Newland Group and
Travelsky Group. They jointly carry out talents training through many cooperative models such as
teaching sharing, course resources sharing, construction of experimental training bases, joint
construction of majors as well as college co-found.
Education Policy Trend
Recently, the PRC government promulgated the "National Vocational Education Reform
Implementation Plan"（國家職業教育改革實施方案）, which not only puts vocational
education on the equal position as ordinary education on the top-level design, but also clarifies
the direction of social diversified school establishment, and once again strengthens the policy
of encouraging private education. The plan has opened up more development room for private
vocational education, especially for those higher education groups (such as China New Higher
Education) which has both undergraduate colleges focusing on applied sciences with vocational
colleges. The plan not only has demonstrated the correctness of the strategic choice of applied
education, but also provides guidance for future development of school establishment.
The promulgation of a series of policies and documents such as "China Education Modernization
2035"（《中國教育現代化2035》）and "Accelerating the Implementation Plan of Education
that private higher vocational education has become an important part of the national education
strategy. Relying on encouragement, guidance and standardized supervision of the PRC, more
development opportunities will be emerged in the private education sector, but also face more
demands and expectations from the national and public levels in improving their own development
standards. In addition, in the government work report, it is mentioned that it will further reform
and improve the examination and enrollment methods for higher vocational colleges and expand
additional one million students enrollment this year, which reflect the determination of the State
to promote the development of vocational education. All higher vocational colleges will directly
benefit therefrom, especially the schools with brand and competitive advantages will have greater
Development strategy of "Improvement, Enlargement, Light Assets"
It is our primary task to improve quality, including improving talent training capability focused
on applied science and driving the overall quality improvement. Secondly, we will enlarge income
base and enhance the utilization rate of schools under the Group, focus on traditional principal
business, expand the sectors for external income and enlarge the income from our principal
and secondary businesses, optimize expenditure structure to cut down operating costs. Thirdly,
we will adopt light assets approach, adjust and optimize its structure and integrate resources
comprehensively, and at the same time, lower capital expenditure and improve the capability of
light assets and strong management.
The Group intends to expand its school network and increase market penetration and market
share in the vocational higher education sector. The Group's investment team has rich investment
experience and has identified certain targets for potential quality acquisitions. The Group gives
priority to invest in those provinces with lower gross higher education enrollment rates and
gradually penetrates into education developed regions. In terms of education level, the Group
focuses on undergraduate school especially independent colleges as our main target and vocational
colleges with potential expansion as the support. The Group plans to use reproducible teaching
models to optimize operation management to schools that we newly invested, so as to enhance
educational leven and financial returns.
01/04/2019 Dissemination of a Marketing Press Release, transmitted by EQS Group.
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