Wisdom Education International Holdings Company Limited
(Stock code: 6068.HK)
Announces 2019 Interim Results
Revenue Surged by 41.1% YoY to RMB835.6 Million
Core Net Profit Increased by 33.0% YoY to RMB216.4 Million
Outline Development Plan for Greater Bay Area to Drive Company's Growth
|For the six
|Profit for the period
|Core net profit
|Earnings per share (RMB cents)
|Interim dividend (HKD cents)
*Core net profit is defined as the profit for the period of the Group after adjusting for those items which are not indicative of the Group's operating performance.
(Hong Kong - 24 April 2019) Wisdom Education International Holdings Company Limited ("Wisdom Education" or the "Company" together with its subsidiaries, the "Group", stock code: 6068.HK) is pleased to announce the interim results for the six months ended 28 February 2019 (the "Period").
Financial indicators show steady growth
During the Period, the Group's total student enrolment increased by 32.2% year-on-year ("YoY") to 54,420, primarily due to the significant increase in student enrolment in Dongguan Guangzheng Preparatory School and Huizhou Guangzheng Preparatory School, as well as the consolidation of Weifang Weizhou School and Zhang Pu Longcheng Schools. Total revenue increased by 41.1% YoY to RMB835.6 million (1H2018: RMB592.0 million) on the growth in student enrolment as well as the increase in average tuition and boarding fees.
Overall gross profit rose from RMB261.8 million to RMB378.7 million, representing a growth of 44.7% YoY, while gross profit margin increased from 44.2% during the same period last year to 45.3%. Core net profit surged by 33.0% YoY to RMB216.4 million (1H2018: RMB162.7 million).
Earnings per share amounted to RMB9.0 cents (1H2018: RMB7.0 cents). The Board of Directors recommends an interim dividend of HKD4.9 cents per share (1H2018: HKD4.0 cents).
For the six months ended 28 February 2019, revenue from tuition and boarding fees increased by 38.7%, from RMB417.4 million to RMB579.0 million, contributing 69.3% of total revenue. The average tuition and boarding fees per student before taking into consideration of the consolidation of Zhang Pu Longcheng Schools increased by 8.9% to RMB 11,042 primarily due to the increase in tuition and boarding fees for the new students in Dongguan Guangming Secondary and Primary Schools and Dongguan Guangzheng Preparatory School. The increase in overall student enrolment also drove revenue from ancillary services to increase by 46.9% to RMB256.5 million, accounting for 30.7% of the total revenue.
Uphold expansion strategy of building greenfield schools and leverage on brand equity, maximum capacity to reach nearly 130,000
With a proven track record in providing all-rounded, quality private K-12 education services over the years, the Group will continue to establish more greenfield schools and expand its business network by leveraging on its excellent brand equity and outstanding teaching quality.
In March 2019, the Group obtained an approval from the Ministry of Education of Shunde District, Foshan for its plan to set up a private not-for-profit primary and secondary school for grade 1 to grade 12 students on a total land area of approximately 191,000 square meters. The maximum capacity of the school is expected to reach 9,210 students.
In addition, the Group is actively building a new school in Yunfu, Guangdong Province. The school will be built in phases and is expected to comprise primary, middle and high school sections. It is expected that the first phase of the boarding school will commence operation from the 2019/2020 school year with a maximum capacity of 10,680 students.
The Group has also entered into cooperation agreements with the local governments of Jiangmen and Chaozhou in Guangdong province respectively, and each of them has agreed to allocate a parcel of land to the Group for the proposed establishment of a primary and secondary boarding school. The maximum capacity of the two schools is expected to be 7,500 students and 8,000 students respectively. The Group has also signed framework agreements with the local governments of Guangzhou and Zhaoqing in Guangdong province respectively, in respect of the proposed development of a boarding school in each of the two cities.
During the Period, total student capacity of the Group increased from 49,804 to 63,000. Based on the expansion plan of our existing schools, total capacity of the Group is expected to increase to a maximum of 93,980 students. Taking into account the new schools under construction or planning, maximum capacity is expected to increase further to 129,370 students, which gives enormous room for organic growth.
To benefit from Greater Bay Area development plan, capture industry opportunities
On 18 February 2019, the Central Government of China issued the Outline Development Plan for the Greater Bay Area, with an aim to further develop nine Guangdong province cities and the two administrative regions of Macao and Hong Kong into a world-class city cluster and an international hub for technology and innovation, through deepening cooperation amongst Guangdong, Hong Kong and Macao, facilitating in-depth integration within the region and promoting coordinated regional economic development. Under such national strategic development, the Greater Bay Area is expected to see robust economic growth, laying a solid foundation for the Group's future development.
Apart from our existing schools in Dongguan and Huizhou, we have entered into cooperation or framework agreements with the local governments of Foshan, Jiangmen, Guangzhou and Zhaoqing, respectively, regarding the proposed establishment of a private boarding school in each of these cities. The Group has, therefore, already covered 6 out of 9 Guangdong cities of the Greater Bay Area, and plans to tap into all Guangdong cities of the region.
In March 2019, the Group entered into a strategic cooperation agreement with Guangdong Huiyin Haide Equity Investment Fund Management Company Limited (廣東匯垠海德股權投資基金管理有限公司) ("Huiyin Haide") under large-scale, state-owned asset manager Guangzhou Industrial Investment Fund Management Co. Ltd (廣州產業投資基金管理有限公司) ("Guangzhou Fund"), in relation to the establishment of an education industry fund primarily for the investment of schools in the Greater Bay Area, with a target size of investment of approximately RMB2.5 billion.
Through the establishment of the education industry fund, the Group will be able to enjoy more convenience and flexibility in identifying or developing schools in the Greater Bay Area. This could also further expand the Group's financing channels and lower its finance cost. The cooperation has laid a solid foundation for the Group's school network expansion, and marked a remarkable step in our long-term development.
The Board of Directors of Wisdom Education commented, "Chapter 8 of the Outline Development Plan has set out the objectives of establishing an education and talent hub in the Greater Bay Area, promoting education cooperation and attracting talent to the nine Guangdong cities. We find the Outline Development Plan encouraging as it has provided solid support to our future growth. We are in view that with vibrant economic development and an increasingly convenient transport network, there will be an inflow of talent together with their children to the Greater Bay Area, thus driving up demand for premium private K-12 education in the region. In the future, the Group will continue to dedicate itself into cultivating talents to contribute to the country, and leverage on the favorable policies to achieve comprehensive coverage in the area as well as new highs in our results."
The Board of Directors of Wisdom Education continued, "In February 2019, the Central Government of China issued the plan for 'China's Education Modernization 2035' (中國教育現代化2035) and the 'Implementation Plan to Accelerate the Modernization of Education (2018-2022)' (加快推進教育現代化實施方案 (2018-2022年)), which proactively encourages social resources to set up schools to support the sustainable and healthy development of private education. With our proven track record in providing comprehensive premium K-12 education services, Wisdom Education should be one of the key beneficiaries of these policies. As education quality is fundamental to building brand equity and business expansion, we will spare no effort in improving our teaching quality and striving for betterment in order to bring greater return to our stakeholders."
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About Wisdom Education International Holdings Company Limited
Wisdom Education International Holdings Company Limited focuses on providing high quality PRC curriculum programmes for primary and secondary school students, with "serving the society with honesty and integrity through our services and cultivating talent with a warm and loving heart" as its educational objective. The Group is a leading premium primary and secondary schools operator in South China, operating 11 premium private schools in 9 campuses, with 4 campuses located in Guangdong province, 1 in Liaoning province, 2 in Shandong province, 1 in Sichuan province and 1 in Fujian province, with a total enrolment of 54,420 students.
This press release is issued by DLK Advisory Limited on behalf of Wisdom Education International Holdings Company Limited.
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24/04/2019 Dissemination of a Financial Press Release, transmitted by EQS Group.
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