Core Net Profit Surges by 18.0% to RMB176.5 Million, with Core Net Profit Margin Achieving at 69.3%;
Further Expands School Network and Size of Student Enrollment to Tap the Private Formal Higher Education Market
HONG KONG — Minsheng Education Group Company Limited (“Minsheng Education” or the “Group,” Stock code: 1569) has announced its unaudited interim results for the six months ended 30 June 2017 (“Period under Review”).
– Revenue increased by 4.9% to RMB254.6 million (1H 2016: RMB242.8 million)
– Gross profit grew by 7.7% to RMB166.1 million (1H 2016: RMB154.3 million). Gross profit margin improved to 65.2% (1H 2016: 63.5%)
– Core net profit increased by 18.0% to RMB176.5 million (1H 2016: RMB149.5 million) . Core net profit margin increased to 69.3% (1H 2016: 61.6%)
– Net profit increased by 7.7% to RMB161.1 million (1H 2016: RMB149.5 million)
– Basic earnings per share were RMB4.52 cents (1H 2016: RMB4.62 cents)
Minsheng Education recorded a revenue of RMB254.6 million for the six months ended 30 June 2017, increasing by approximately 4.9% when compared to the corresponding period of the previous year. Gross profit rose by 7.7% to approximately RMB166.1 million, with gross profit margin up by 1.7 percentage points to approximately 65.2%, mainly due to the increase in student enrollment and school utilisation rate. Net profit was approximately RMB161.1 million, rising by 7.7% compared to the corresponding period of the previous year. Excluding the listing expenses, the core net profit surged by 18.0% to RMB176.5 million as core net profit margin grew by 7.7 percentage points to 69.3%. Basic earnings per share amounted to RMB4.52 cents. The Board does not recommend an interim dividend for the six months ended 30 June 2017.
Mr. Li Xuechun, Chairman of Minsheng Education, said, “The listing of Minsheng Education marked the beginning of a new era for us. In our efforts to achieve business growth, we plan to further expand our school network through acquiring existing schools and establishing new schools. The Group will capitalise on our strengths and continue to identify suitable acquisition opportunities to solidify our position as one of the largest private provider of formal higher education in China and to generate better income, thus enhancing the value of the Group and creating higher returns for shareholders in the long run.”
Strong School Network and Synergies Created with Overseas Schools
The Group had an aggregate of 32,515 students enrolled at the schools that it owned and operated as at 30 June 2017, namely Chongqing College of Humanities, Science and Technology, Pass College of Chongqing Technology and Business University, Chongqing Vocational College of Applied Technology and Inner Mongolia Fengzhou Vocational College (Qingcheng Branch) (collectively the “Schools”). Besides, Laoling Minsheng Secondary Vocational School, the fifth school of the Group, is expected to enroll its first batch of students in September 2018. In addition, the Group has begun cooperation with the People’s Government of Laoling and Bureau of Education of Laoling whereby Laoling Secondary Vocational and Technical School is to be managed and operated by Laoling Minsheng Secondary Vocational School under an entrustment management arrangement.
As for the overseas market, the Group has invested in Beacon International College PTE. LTD. in Singapore and Hong Kong Nang Yan College of Higher Education Limited in Hong Kong in order to introduce advanced curricula and innovative teaching methods into its schools in the PRC to bolster its education quality and reputation, and to create more learning exchange opportunities for its students in the PRC.
Enhancing Teaching Quality
As at 30 June 2017, the number of school teachers has increased by approximately 147, of which, the number of teachers having graduate qualification or above increased by approximately 57 and the number of teachers holding deputy senior title or above increased by approximately 37. At the same time, the Group has recruited more experienced personnel in various positions.
The Group has implemented a job competition mechanism for mid-level management staff in its Pass College of Chongqing Technology and Business University and Chongqing Vocational College of Applied Technology.
Upgrading Teaching Facilities
The Group has further improved the teaching conditions in 2017. Chongqing College of Humanities, Science and Technology has recently built the Innovation and Entrepreneurship College and the Innovation and Entrepreneurship Training Base; Chongqing College of Humanities, Science and Technology and Chongqing Vocational College of Applied Technology have refurbished their stadiums, student apartments in Pass College of Chongqing Technology and Business University and Chongqing Vocational College of Applied Technology have configured new facilities, and Shandong Laoling Minsheng Secondary Vocational School has finished the new campus planning, and has started the basic construction.
China’s economy is likely to maintain steady growth in the next decade. The attention to children’s education by Chinese households, support from the PRC central and local governments, and greater investment in private education for all of Chinese society are likely to drive the expansion of China’s private formal higher education market.
Minsheng Education continues to focus on providing high-quality private formal higher education in China dedicated to nurturing professional talent. In addition, the Group attributes the relatively high initial graduate employment rates to the effectiveness of its education, which it believes will continue to elevate its brand recognition and attract talented students.
Expand School Numbers and Network Internationally
Going forward, the Group will expand its school numbers and student sizes through mergers and acquisitions and internal growth. It will explore the investment opportunities in independently organized ordinary undergraduate higher education institutions; independent colleges with preliminary conditions to be converted to independently organized ordinary undergraduate higher education institutions; higher vocational (junior) colleges with preliminary conditions to be upgraded to independently organized ordinary undergraduate higher education institutions; and specialized secondary colleges, such as colleges having medical major, arts specialised colleges, and aviation specialized colleges.
As for internal growth, the Group will increase the student enrollment quota and new education projects. In July 2017, the Ministry of Education approved Pass College of Chongqing Technology and Business University for the first time to engage in providing higher education continuing education, three approved junior college majors, namely securities and futures, accounting and marketing in relation to higher education continuing education with student enrollment starting in 2017. It will also increase the educational training programs and more than 600 students have enrolled in the first phase in 2017. Moreover, tuition and accommodation fees will be increased appropriately. In 2017, it has raised the tuition fees for certain majors in its schools, and three schools in Chongqing are planning to raise student accommodation fees. In the second half of 2017, certain schools will also increase logistics service items. The Group strives to benefit from receiving the support under the government subsidy scheme. In July 2017, three schools in Chongqing have received an aggregate of approximately RMB47.5 million of per-student government subsidies.
To expand the internationalised school operation, the Group will choose universities with both good brand name and good quality in Europe and the United States as its acquisition targets. It will set up a marketing department and an international college in each school to carry out a variety of models of cooperation in operating schools such as 2 + 2 and 3 + 1 programs and cooperate with famous international universities to carry out network teaching.
Develop Intelligence Campuses
The Group will gradually expand the teaching-by-network scope and together with its campuses achieve effective information management and services. Chongqing College of Humanities, Science and Technology has developed five network courses, and has already provided facilities for several thousands of students to study, and the number of network courses will gradually be expanded.
To improve the centralised management, the Group’s schools share courses with a high level of high-quality teacher resources and logistics supply, including the implementation of a unified tender and procurement for large amounts procurement, and for building construction, aimed at strengthening management.