Focus on the integration of higher education resources: the income scale has increased greatly, and risks are also forming.
On September 28th, Yuhua Education announced that it would acquire the remaining 30% equity of Hunan Falcon (the organizer of hunan international economics university) at a total consideration of 7212 million yuan. 72. The purchase price of1200 million yuan is about 0.67 times of the annual net profit of fiscal year 20 19, accounting for 33.92% of cash and cash equivalents at the end of fiscal year 20 19. Judging from the proportion of net profit and cash flow in hand, Yuhua Education spent a lot of money on this acquisition.
Whether this acquisition is cost-effective, let's take a look at the information previously disclosed by the management. According to the company's previous public conference call, hunan international economics university expects to achieve a net profit of 300 million yuan in fiscal year 2020, and the corresponding net profit of 30% equity is about 90 million yuan. Judging from the profit space generated by other competitors' acquisitions in the past, it is ok to make a profit of 90 million yuan from the transaction of 30% equity of Yuhua Education.
Judging from the valuation, the purchase price of 7212 million yuan corresponds to about 8 times of PE in FY20, and the transaction consideration is lower than that of Yuhua Education's 20 times of PE in FY20. Perhaps due to the low consideration of the transaction, Yuhua Education's share price once rose by more than 7% on the 28th, and the market seems to be quite satisfied with the acquisition.
Upon completion of this acquisition, Hunan Falcon will become a wholly-owned subsidiary of Yuhua Education, with a shareholding ratio of 65,438+000%, which means that four higher education institutions under Yuhua Education (Zhengzhou Institute of Business and Technology, hunan international economics university, Shandong Cai Ying College, and Stanford International University in Thailand) all hold 65,438+000%, and the concentration of higher education assets is further enhanced.
Investors who have been paying attention to Yuhua Education for a long time should know that Yuhua Education was the head enterprise of K- 12 education in Central China before it landed on the Hong Kong Stock Exchange, and Zhengzhou Institute of Technology was the only higher education asset. However, after 20 17 landed on the Hong Kong Stock Exchange, the development strategic focus of Yuhua Education began to tilt towards higher education. Especially in 20 18, the education industry was influenced by policies such as promoting the law by the people and submitting manuscripts, and education in China accelerated the plundering war of higher education resources. Since listing, Hunan Institute of International Economics, Shandong Cai Ying College and Thailand Stanford International University have been merged.
With the purchase of higher education resources, the income structure of Yuhua Education has also undergone great changes. The ratio of K 12 income of Yuhua Education to total income decreased from 55.38% of 20 17 wealth to 34.59% of 20 19 financial report; The income of higher education increased from 37.8% in fiscal year 20 17 to 62.06% in fiscal year 20 19, and the income of higher education exceeded 65,438 billion yuan for the first time. With the increasing income of higher education, the income scale of education in China has also shown a double-digit high growth. Revenue increased from 846 million yuan in fiscal year 20 17 to171400 million yuan in fiscal year 20 19, with a compound annual growth rate of 42.3%, higher than that of peers.
Under the situation that M&A is in full swing and its performance shows double-digit high growth, Caihuashe believes that investors should pay attention to the rise of goodwill risk while taking a fancy to the high growth of enterprises. According to the financial report, as of August 3 1 20 19, due to multiple acquisitions, the goodwill of Yuhua Education was108.5 billion yuan, which was the same as the income of the higher education sector in the 20 19 financial report. With the acquisition of the remaining 10% equity of Shandong Cai Ying University and the remaining 30% equity of hunan international economics university this year, the goodwill of Yuhua Education will continue to climb in FY 2020. Although mergers and acquisitions will inevitably increase the risk of goodwill, investors still need to pay attention to the changes in the value and impairment of goodwill. After all, there are countless cases of falling down because of the high value of goodwill and unsatisfactory performance. For example, the case of all-pass education that recently collapsed because of goodwill is still vivid.
Behind the transfer to higher education: there is considerable room for price increase.
As a leading enterprise in the field of K- 12 education in Central China, Yuhua Education has chosen to increase its investment in higher education resources after listing in Hong Kong, but it has made little achievements in the field of traditional strength K- 12, which makes people wonder what its intention is.
In fact, the increasing competition for higher education resources by Chinese education reflects the investment orientation and future development trend of the mainstream education industry at present. In recent years, influenced by the law of promoting the people and the draft for review, the asset structure of the education industry has been reshaped and the integration of industry resources has been accelerated. Due to the limited influence of the people's promotion law and the draft for review, the reform of vocational education is deepening, the gross enrollment rate of higher education is increasing, the number of students is increasing, and the enrollment scale is expanding. Higher education resources have become one of the most sought-after high-quality assets in the education industry. In this situation, established private enterprises with good reputation and capital strength in the field of education have become the main force to integrate higher education resources. China Education Holdings, the leader of higher education, has made eight acquisitions since its listing. People's livelihood education and new higher education have obtained more than five kinds of higher education resources since they went public. It can be seen that higher education resources have entered the stage of mutual competition.
Looking forward to the future development prospect of higher education, the war of plundering higher education resources will continue. According to the yost Sullivan Report, it is estimated that the total number of private higher education students in China will increase from 6.5 million in 20 18 to 8 million in 2023. The average tuition fee per academic year will increase from 13 in 2065 and 438+08 in 530 to 17095 yuan in 2023. Under the situation of double growth of higher education industry increment and price increase space, private higher education enterprises listed in Hong Kong stock market are bound to increase the competition for high-quality resources. However, the education of educating China, which has been transferred to the field of higher education, is bound to continue to increase the pace of staking.
Author: Shen Daban