Shared by: Hevin/Rong
< h1 class= "pgc-h-arrow-right" > investment logic</h1>
Holley University Group is a "small and beautiful" relatively pure higher education company. The group's three schools are Holley College of Guangdong University of Technology (hereinafter referred to as "Holley College"), Guangzhou Holley Vocational College of Science and Technology (hereinafter referred to as "Holley Vocational College"), guangdong Holley Technician College (hereinafter referred to as "Holley Technician College"), the above three schools belong to 3 levels, all located in the Greater Bay Area of Guangdong Province. I believe that the group's schools have a good location advantage, and the quality of enrollment and graduate employment is very high.
The Group went public in November 2019 and is currently of relatively low market attention.
According to the guidance and strategic development plan previously provided by the Group, the core net profit of FY2020 is 320 million yuan, and FY2021-FY2023 will maintain a growth rate of 25% of core net profit.
However, according to the Group's disclosure, due to the impact of the independent college transfer policy, the number of students enrolled in FY2021 is lower than expected, and the core net profit growth rate of FY2021 is expected to be only about 10%.
Considering that the transfer of Holley College is in advance, after the transfer of Holley College (to pay the "break-up fee"), superimposed on the new expansion plan to increase capital expenditure, the growth rate of the Group's core net profit will return to 20% or more, and the specific growth rate needs to be judged according to the progress of the transfer.
The Group attaches great importance to the interests of minority shareholders, the dividend ratio is relatively high, and the controlling shareholder of the Group has also revealed that it hopes to expand the market value of the Group as soon as possible to enter the List of Hong Kong Stock Connect as soon as possible.
The Group's current market capitalization is about HKD 3.74 billion (calculated at a closing price of 3.12HKD per share in 20200717), corresponding to the FY2020 core net profit guidance (320 million yuan) of about 10.5PE (exchange rate calculated at 0.9), and the valuation has a large room for improvement compared with the peers in the higher education industry, which is due to the strong anti-cyclicality of higher education stocks, the future earnings and growth rate are relatively easy to predict, and the certainty is high.
The Group's performance catalysts are as follows:
1) The transfer of independent colleges (i.e. Holley College), although the "Regulations on the Implementation of the Civil Promotion Law" have not yet been implemented, but the education authorities have accelerated the transfer of independent colleges;
2) Holley Vocational College to bachelor's degree;
3) Jiangmen Campus is put into use, the campus is a junior college, and there is a possibility of college to undergraduate degree in the future;
4) Mergers and acquisitions, optimistic expectations of the next 1-2 mergers and acquisitions projects (schools) landed.
Based on the above assumptions, considering the smooth integration of mergers and acquisitions and superimposed endogenous growth, in the next 5 years, the core net profit of the group is expected to reach 1 billion to 1.2 billion yuan, giving 15-20 times the PE valuation, and the investment income will reach 3.5-6.1 times.
<h1 class="pgc-h-arrow-right" > second, industry analysis</h1>
The analysis of the higher education industry, teaching and research has been discussed more, see the "Ten Years of Competition Trend Prospect of Private Higher Education", which has a thorough analysis of the competitive pattern of the higher education industry, and the following is only the core points of the higher education industry.
2.1 The number of students enrolled in higher education is determined by the gross enrollment rate and the population base
In terms of gross enrollment rate, according to the national "13th Five-Year Plan", higher education is expected to enter the popularization stage, and the gross enrollment rate will be rapidly improved.
In terms of population base, the number of new population in 2001-2016 remained high (16 million to 17 million), and even showed a slight upward trend, and the number of new populations began to decline in 2018, as detailed in the chart below.
The number of new births over a 15-year period, 2002-2017, will ensure that the number of people of higher education age will be stable for at least 10 years from 2020 onwards.
The increase in gross enrollment rate and the stable population base of the school-age population in higher education will provide relatively large development space for the higher education industry.
2.2 If the enrollment rate of higher education in China is low, there are also differences between provinces and municipalities directly under the central government
At present, the gross enrollment rate of higher education in China is still less than 50%, compared with developed countries in China, there is still a gap in the gross enrollment rate of higher education, with the popularization of higher education, the gross enrollment rate will usher in a large room for improvement.
Throughout the country, there are also large differences in the gross enrollment rate of higher education in various provinces and municipalities directly under the central government, as shown in the figure below (the horizontal axis is the gross enrollment rate, and the number axis is the number of permanent residents).
Several provinces located in the second quadrant of the figure below, represented by Guangdong Province, have the characteristics of a relatively large number of permanent residents and a relatively low gross enrollment rate, so their higher education industry has a large space for development.
Holley University Group is located in Guangdong Province, has a good regional advantage, and future growth can be expected.
2.3 China's private higher education market space is vast
At present, there are more than 2600 colleges and universities in China, including 749 private colleges and universities, as detailed in the figure below.
According to relevant statistics, the market size of China's private higher education industry will be about 130 billion yuan in 2020, and it will maintain a growth rate of more than 7% in the future, and the industry has a lot of room for growth.
2.4 The policy of higher education is friendly, but the participants in the higher education industry will be divided in the future
The relevant policies of the higher education industry, especially the "Adjustment of the Implementation of the Civil Promotion Law (Draft for Review)", are more friendly to the higher education industry and have not set up major obstacles. At present, the policies that have the greatest impact on participants in the higher education industry are:
1) Choose one of the two for-profit/non-profit school status, if you choose the for-profit school status, you will need to pay income tax (income tax rate of 15%);
2) Transfer of independent colleges, after the completion of the transfer of independent colleges, the college will no longer need to pay management fees/brand use fees to the "big school", and the saved management fees/brand use fees will be converted into profits. Choosing a for-profit school identity and completing the transfer of independent colleges, one positive and one negative, will produce more advantages than disadvantages for some private schools with excellent operations.
2.5 The role of private higher education in society
First, colleges and universities are divided into research-oriented and application-oriented, and most of the private higher education schools take the application-oriented positioning and focus on cultivating vocational skills talents for the society.
Second, private higher education helps to alleviate the pressure on social employment.
In the 19/20 academic year, there are about 8.74 million graduates, nearly 600,000 graduates who have returned from studying abroad, the potential employment population is huge, the epidemic factors are superimposed, the macroeconomic situation is difficult, the employment pressure is very large, and higher education can be used as a "reservoir" to delay employment demand.
Taking 2003 as an example, it was the graduation time of the first batch of students after the expansion of college enrollment in 1999, and the number of college graduates waiting for employment accounted for 35.8% that year.
In order to avoid another situation in 2003, the Ministry of Education launched a new round of enrollment expansion, with 189,000 graduate students and more than 320,000 students, and many schools have launched discussions on the expansion of the second bachelor's degree.
Third, private higher education will help alleviate the financial pressure of the government. The government's investment in education has huge financial pressure, of which the funds invested in higher education account for less than 4% of the total education funds, there are structural deficiencies, and the development of private higher education will help alleviate the financial pressure of the government.
<h1 class="pgc-h-arrow-right" > 3. Company Analysis </h1>
3.1 Development history of the Group
In 2000, It was established and operated Guangdong Holley Technical School (the predecessor of Guangdong Holley Technician College), in April and November 2001, Holley College (affiliated to Guangdong University of Technology) and Guangzhou Holley Science and Technology College (the predecessor of Guangzhou Holley Vocational College of Science and Technology) were established respectively, in 2004 Holley College became one of the first batch of private independent colleges in Guangdong Province, began to recruit undergraduate students, and the Group was listed on the Hong Kong Stock Exchange in November 2019.
3.2 Group Briefing
The group's three schools, Holley College, Holley Vocational College, and Holley Technician College, belong to exactly 3 levels.
According to the Frost & Sullivan report, the Group ranks second among private vocational education suppliers in South China and fifth among private higher education providers in South China in terms of the number of students enrolled.
The group's school science and engineering majors accounted for more than 40%, and the science and engineering were remarkable. The Group has 3 campuses, namely Zengcheng Campus (main campus), Yunfu Campus (put into use in 2019), Jiangmen Campus (under construction), each campus is as follows:
1) Zengcheng Campus covers an area of nearly 1,000 acres, with a planned student capacity of about 35,000 people;
2) The Yunfu campus covers an area of about 520 acres, and the current utilization rate is only 25%, and the utilization rate will be significantly improved in the 20/21 academic year;
3) The Jiangmen campus is tentatively planned to have a student capacity of 8,100 and will be put into use in the 21/22 academic year.
3.2.1 Introduction to Holley College
Holley College is a private independent college with a four- to five-year undergraduate program, and its campus is located in Zengcheng.
As of February 29, 2020, the number of students enrolled in the college was 17,780.
In terms of the number of students in the school, according to the Group's plan, the college will add 2,000-3,000 new students per year from the 20/21 academic year, and achieve 25,000 students in three years.
However, as Holley College entered the transfer process this year, the Guangdong Provincial Department of Education reduced the undergraduate science quota of the college in order to ensure a smooth transfer, with only 4330 undergraduate students (including special inserts) in the 20/21 academic year, and only 2930 undergraduate students excluding special inserts, a decrease of more than 2600 compared with the 19/20 academic year. After the completion of the conversion of Holley College, the undergraduate degree (excluding the special insert) will return to the growth trend.
In terms of tuition fees, the average tuition fee for the 19/20 academic year exceeds 21,000 yuan, of which the average tuition fee for the first and second years is 26,000 yuan, the average tuition fee for the third year is 21,000 yuan, and the average tuition fee for the senior year is 18,000 yuan, and the group plans to adjust the tuition fee of the college every two years, an increase of about 10%, and the tuition fee for new students in the 20/21 academic year is about 29,000 yuan.
Holley College has completed two campus expansion plans and will build three new student dormitories in 2020 to meet the needs of future student growth.
3.2.2 Introduction to Holley Vocational College
Holley Vocational College is a junior college, and uses both Zengcheng Campus and Yunfu Campus.
As of February 29, 2020, the number of students enrolled in the college was 19,779, of which 5,583 were in adult education.
Due to the use of the Yunfu Campus, the Guangdong Provincial Department of Education has given Holley Vocational College a place from more than 6,000 students in the 19/20 academic year to 9,590 in the 20/21 academic year, an increase of 3,698 students who have passed the spring enrollment (or academic examination).
Yunfu Campus previously planned a student capacity of 8,000 people, the utilization rate of nearly 25%, with the expansion of Holley Vocational College, in the 20/21 academic year Yunfu Campus will add more than 2,300 students, the utilization rate will increase to more than 50%.
Holley Vocational College, there is a possibility of upgrading from a junior college to an undergraduate college in the future. According to the latest national policy, vocational colleges can be upgraded to vocational undergraduate colleges, previously Holley Vocational College has been approved in Guangdong Province, upgraded to undergraduate colleges and universities, but due to the "two sessions" related policy changes, Holley Vocational College has not been able to become the first batch of guangdong province to achieve upgraded undergraduate colleges (the first batch of only two).
I believe that in the future, when Guangdong Province continues to promote the upgrading of vocational colleges to undergraduate colleges, Holley Vocational College may be preferred.
3.2.3 Introduction to Holley Technician College
As of February 29, 2020, there were 8,058 students enrolled in the school. The number of students enrolled in the 19/20 academic year decreased compared to the 18/19 academic year, due to the recent graduation of the faculty's only spring class, which began 3 years ago, with more than 500 graduates.
In the 20/21 academic year, Holley Technician College enrolled 3,500 students. In the future, Holley Technician College will maintain a student population of about 9,000 students.
In terms of tuition fees, due to the fierce competition between the technician colleges, Holley Technician College has no tuition increase plan, and will remain at the level of 11,000 yuan in the future.
The Jiangmen Campus of the Group has been granted land use rights in the name of Holley Technician College and will be put into use in the 21/22 academic year.
3.4 Group General Briefing
In terms of teachers, the group has hired 1650 teachers, and the average annual salary of teachers is 60,000 yuan, which has been adjusted every year, but compared with the average annual salary of all employees (including teachers) of the group of 78,000 yuan, the treatment of teachers is not high. The proportion of part-time teachers is about 10%.
In terms of the total number of students in school (excluding the number of adult education), there has been a good improvement from the 18/19 academic year, mainly due to the rapid growth of the number of students in Holley College in recent years, and the number of students in Holley College accounts for about 40%.
In terms of the teacher-student ratio, the indicator has shown a downward trend in the past three years, and the Group has also increased its efforts to recruit teachers last year, and the indicator is currently maintained at 18:1.
In terms of new student registration rate, Holley College's enrollment rate is higher, maintained at more than 90%, and Holley Vocational College's enrollment rate is relatively low, 79% in the 19/20 academic year, and it is expected to increase in the 20/21 academic year, due to the certainty brought about by the number of students enrolled (or examined) in the spring.
In terms of tuition fees, the average annual growth rate of average tuition fees in the past three years (overall) is about 10%, mainly due to the rapid growth of the average tuition fee of Holley College (the average annual growth rate is more than 10%), which is due to the relatively high proportion of holley college students and the greater contribution to the growth rate of the total average tuition fee.
3.5 Group Competitive Advantage
First, the quality advantage of running the school.
In terms of "entrance", from 2014 to 2018, Holley College, the average admission score line of liberal arts exceeded the provincial control line by 20.6 points, and the average admission score line of science exceeded the provincial control line by 16.2 points.
In terms of "export", the employment rate is relatively high, and the initial employment rate of the graduates of Holley College, Holley Vocational College and Holley Technician College in 2019 is 96.0%, 94.6% and 98.4% respectively, and the employment rate index also has advantages compared with famous universities in Guangdong Province.
Both the "entrance" and the "export" reflect the group's educational quality advantages.
Second, regional advantages.
The Group's schools are located in the Greater Bay Area of Guangdong Province, while the gross enrollment rate in Guangdong Province is still low (46%), and there is still a gap from the plan (50%), providing a broad space for the Group's business development.
Third, internal synergies.
The Group's three colleges are at exactly three levels, and they have the possibility of exerting synergies.
For example, Holley Technician College students may choose to advance to Holley Vocational College for further studies, Holley Vocational College students may choose to pass the exam to enroll in Holley College's advanced course, and a student can remain in the Group's system for many years and continue to contribute revenue, similar to the SaaS model of the software industry.
3.6 Introduction of the Founder of the Group
The founder and chairman of the group, Mr. Zhang Zhifeng, was engaged in the training business at the beginning of the reform and opening up (at that time, the demand for skilled talents in the Pearl River Delta region was very large), and also co-founded Guangdong Baiyun College, and then left Baiyun College to work alone.
Although Mr. Zhang Zhifeng has assets other than higher education under his name, the volume of such assets is small, and his time and energy are invested in the business development of the Group.
Mr. Zhang Zhifeng, together with the second generation of successor Mr. xx (one of the board members), lives on a daily basis and solves daily problems in a timely and efficient manner.
3.7 Introduction to the Group's Shareholding Structure
The equity of the Group is relatively concentrated, and Mr. Zhang Zhifeng personally holds 75% of the equity of the Group. During the Group's IPO stage, the cornerstone investors were the China Merchants Acquisition Fund, 51Job and Mr. Zhou Da, Chairman of Kunlun Holdings, with a total subscription of about 134 million shares.
The number of shares outstanding by the Group is very small.
The management of the group has not yet held shares, and at the beginning of the listing, it was revealed that it hoped to "list first and then incentivize", and at present, according to the latest feedback, the group is formulating relevant plans, and will announce specific plans in FY20H2. The landing of management equity incentives may boost the group's stock price, which is worth the expectations of small and medium-sized investors.
3.8 Introduction to the Group's Dividends
According to the Disclosure of the Group, the dividend policy is that the annual dividend ratio is not less than 30% of the net profit.
According to the FY20H1 results announcement, the interim dividend was RMB0.051 per share, and the total amount of dividends corresponded to a net profit of 44.6%, corresponding to an adjusted net profit of 38.3%, and the dividend ratio was higher than expected.
According to management disclosures, the Group actually pays dividends at 30% of EBITDA because:
1) The depreciation expense of the group's fixed assets is higher;
2) The Group has a arrears due to the controlling shareholder on its books, and there is no actual interest to be paid, but interest is required in accordance with Hong Kong Accounting Standards.
Depreciation and interest offset net profit, but did not actually hurt cash flow, and net cash flow from operating activities was much greater than net profit. It is expected that the Group will continue to pay dividends in accordance with the above base and proportion in the future.
<h1 class="pgc-h-arrow-right" > fourth, financial analysis</h1>
The Group's revenue structure, in the last three years and FY20H1, accounts for about 93% of tuition fees and about 7% of accommodation fees.
Group revenue, divided by colleges, the last 3 years Holley College revenue to the group's total revenue contributed the most, the latest proportion has exceeded 50% (FY20H1 data), Holley Technician College revenue to the group's total revenue contribution showed a downward trend, the latest proportion of only about 13% (FY20H1 data).
In terms of gross profit margin, the gross profit margin has remained around 55% in the last three years and FY2020H1. Core net profit margins showed an upward trend, mainly due to the increase in tuition fees and the lack of significant changes in costs.
Divided by college: The gross profit margin of Holley College in the past 3 years is relatively low, this is because Holley College needs to pay management fees to the "big school" (that is, Guangdong University of Technology), but the gross profit margin of Holley College is on the rise;
In the past three years, the gross profit margin of Holley Vocational College has declined, which is due to the increase in expenditure on newly hired teachers in Holley Vocational College and the increase in depreciation and amortization due to the use of the new Yunfu Campus;
In the past three years, the gross profit margin of Holley Technician College has also shown a downward trend, which is due to the amortization caused by Holley Technician College's purchase of land use rights in Jiangmen Campus.
In terms of sales costs, in the past three years, through splitting, it can be seen that the top three proportions are faculty and dormitory management personnel expenses, depreciation and amortization (due to the high proportion of the Group's fixed assets to total assets), and management fees (management fees paid by Holley College to the "Big School").
In terms of three fees, in the past three years, the sales expense ratio and administrative expense ratio have shown an upward trend, while the financial expense ratio has dropped significantly. In the past three years, the ratio of operating net cash flow to net profit has also shown an upward trend.
In terms of operating indicators, in the past two years, the Group's ROE and debt ratio have shown an upward trend. According to FY20H1 data, the Group's debt ratio has decreased significantly. The roE level of the group is not high, which is determined by the attributes of the higher education industry itself (it belongs to the asset-heavy operation industry, and the asset turnover rate is generally not high).
In terms of capital expenditure, the capital expenditure of FY17, FY18 and FY19 is more than 300 million yuan, more than 400 million yuan and more than 800 million yuan respectively, mainly for campus expansion and new campuses, and it is expected that FY20 will maintain a high level of capital expenditure, mainly for the construction of Jiangmen campus (planning investment of about 600 million yuan).
In terms of income tax, the Group has not yet paid income tax, and it is expected that all three schools of the Group will choose the status of for-profit schools, and will be required to pay income tax at a rate of 15% in the future.
In terms of management fees, Holley College has entered the process of transfer, and after the transfer is completed, Holley College will be exempted from paying 17% (proportion of revenue) management fees.
Even if the Group needs to pay income tax in the future, it is expected that the Group's net profit margin will still increase under the favorable impact of the exemption from management fees.
<h1 class="pgc-h-arrow-right" >5</h1>
At present, there are differences in the valuation of higher education groups.
In my opinion, the difference in the valuation of higher education companies depends on the following 3 factors:
1) The quality of its schools depends on the geographical location, level of schooling, quality of schooling, and subsequent growth space;
2) M&A capability, depending on cash reserves, financing capabilities, etc.;
3) Post-investment management after the merger depends on the improvement of the acquired school. Holley University Group has not yet landed mergers and acquisitions, and the market valuation of it is mainly based on its endogenous growth.
As mentioned above, holley college quotas have declined significantly in the 20/21 academic year, so it is roughly estimated that the growth rate of FY21 net profit cannot reach 25%, and the expected growth rate is only about 10%.
If Holley College can complete the conversion within the 20/21 academic year, FY22 is expected to resume a net profit growth rate of 25%.
Looking at the higher education industry, the dynamic valuation of Holley University Group is at a relatively low level among listed companies in the same industry, corresponding to the net profit of FY20 of only 10.5PE.
Among the many listed companies in the same industry, the most comparable with Holley University Group is Zhonghui Group, which is relatively close in geographical location (all located in South China), school size, and revenue and profit, but the proportion of undergraduate students in Zhonghui Group is higher than that of Holley University Group.
The dynamic valuation of Zhonghui Group has reached about 17PE, and the valuation gap of Holley University Group is obvious.
The long-term outlook of Holley University Group (FY2025) is that the total number of students in the future endogenous growth target is 80,000, of which the number of students in Holley College is 25,000, the number of students in Holley Vocational College (after upgrading to undergraduate) is 2.5, and the number of students in Holley Technician College (after obtaining the college qualification at Jiangmen Campus) is 15,000, while the Group promotes the training business, with the goal of achieving 10% of the total revenue from the training business. And it is expected to implement the merger and acquisition of 1-2 schools in the next 5 years.
Based on the above outlook, it is optimistically estimated that the net profit of FY2025 Group will reach 1 billion to 1.2 billion yuan, giving 15-20 times the PE valuation, and the investment income will reach 3.5-6.1 times.
<h1 class="pgc-h-arrow-right" >6</h1>
I believe that Holley University Group belongs to a pure Greater Bay Area higher education group, teaching quality, financial situation is better, endogenous growth will return to a higher growth trend after the completion of Holley College's conversion, mergers and acquisitions are expected, net profit will maintain growth, the dividend ratio is high, and the group valuation is at a low level, and the future market value of the group is expected to be double-clicked by Davis.
The Group's stock price catalysts include the transfer of Holley College, the upgrading of Holley Vocational College to undergraduate colleges, mergers and acquisitions, management incentives, etc., which are more interesting.
glory:
My sharing will focus on Holley University Group's corporate culture, shortcomings and risks, and plans for the 20/21 academic year.
<h1 class="pgc-h-arrow-right" > first, the introduction of the group's corporate culture</h1>
1.1 Introduction of Group Management
The core management of the Group is Mr. Zhang Zhifeng (Founder and Chairman) and Mr. Ye Yaming (Executive Director and CEO).
Mr. Zhang Zhifeng, aged 53, is a member of the Guangdong Provincial Committee of the Chinese People's Political Consultative Conference and a member of the Standing Committee of the Chinese People's Political Consultative Conference of Zengcheng City, who founded the Guangdong Holley Technical School (the predecessor of Holley Technician College) in May 2000. Mr. Zhang Zhifeng co-founded Guangdong Baiyun College to engage in training business, and then turned to higher education business.
Mr. Yaming Ip, aged 60, is an Executive Director and Chief Executive Officer of the Group and is responsible for the day-to-day management of the Group. Mr. Yaming Yip joined the Group in May 2000.
The Three Executive Deans of the Group's three colleges are responsible for the day-to-day management.
1.2 Introduction to corporate culture
The group's corporate culture has always adhered to serving students and sending high-quality talents to the society, and the school-running philosophy is "education as the root, students as the foundation, teachers as the most important, and quality first". The Group's vision is to run a century-old famous school loved by students. The Group's three schools are all higher education schools featuring science and engineering. Holley College's motto is "Unity, Diligence, Truth-Seeking, Innovation". The motto of Holley Vocational College is "Virtue, Strength, Pragmatism and Innovation".
By looking at the Group for a long time, I think that the Culture of the Group has the following three characteristics:
First, pragmatic and practical.
The three schools under the group are all higher education schools characterized by science and engineering, the style of work and speech is similar to that of "science and engineering men", the school is very pragmatic in professional curriculum settings and teacher recruitment, closely following the actual needs of Guangdong Province, civil engineering and architecture, accounting and management, journalism, art and other majors in Guangdong Province have distinct characteristics, are the majors with greater demand in Guangdong Province.
The group is "grassroots" born, has no background, and can only survive if it is pragmatic. The students trained by the group learn the knowledge that society really needs, find good jobs, form a good reputation and effect, and then obtain a better source of students and form a virtuous circle.
Second, strict management.
"Strict management of learning, strict management of education, strict management of schools" is the group's school management policy, only in the process of strict management, hard work, can have a foothold.
Third, be positive.
Artificial Intelligence and Philosophy are two compulsory courses at Holley College.
In addition, in the 13 years of enrollment, the group weighed and sacrificed some of holley college resources to tilt to holley technician college, and made the best efforts to maintain the leading position of holley technician college in Guangdong Province, while the technician college of the same industry company declined.
I believe that the Group's education has the following characteristics:
First, school-enterprise cooperation is close. As of August 31, 2019, Holley College has signed cooperation agreements with more than 800 enterprises in the Pearl River Delta region, setting up internship bases in enterprises, and attaches great importance to practice and application.
Second, attach importance to employment guidance and encourage entrepreneurship and innovation. As of 31 August 2019, a total of 200 students from the Group's three schools had participated in more than 50 entrepreneurial and innovative projects with remarkable results.
Third, high employment rate. The Group attaches great importance to the employment of graduates, with the employment rate ranking among the best in similar schools and the starting salary being higher than that of similar schools in Guangdong Province
Fourth, the Group adopts centralized management of 3 schools, through the teachers, facilities, school quality and reputation of Holley College, driving the development of Holley Vocational College and Holley Technician College, which is conducive to the integration of resources of the 3 schools, belongs to economies of scale, continuously optimizes synergies, reduces operating costs, and maintains consistent teaching quality and implements consistent teaching strategies while meeting the basic requirements of increasing numbers of students.
<h1 class="pgc-h-arrow-right" > two, short boards and risks</h1>
2.1 Short board analysis
First, the group's colleges are in the middle of the private universities, and there are no private colleges that have yet entered the top level, if the group cannot effectively improve the level of its own colleges, it may be at a disadvantage in the future competition.
Second, the group's teacher salaries are at a medium level in private colleges and universities, and the teacher-student ratio index is also at a medium level, and the group's operating costs are likely to rise.
Third, the Group currently has no precedent for successful mergers and acquisitions, and the ability to merge and subsequently integrate remains to be seen.
2.2 Risk Warnings
The risks associated with the transfer of Holley College: whether the transfer can be successfully completed and the degree of impact on the enrollment quota after the completion of the transfer are the greater tests of the Group.
The Group plans to submit an application for transfer at the end of 2020 and expects to complete the transfer in the first half of 2021.
In order to promote the transfer of independent colleges, the Department of Education of Guangdong Province has lowered the 20/21 academic year quota for independent colleges in Guangdong Province that have not yet completed the transfer.
The completion of Holley College's transformation is the key to the Group's return to high growth.
Risks associated with the upgrading of Holley Vocational College to undergraduate institutions: whether it can be upgraded to an applied undergraduate college as scheduled, and whether it can handle the differences (enrollment and operation) with Holley College after the upgrade is completed to avoid competition.
Risks associated with Holley Vocational College's application for college qualifications: how to maintain the current scale of students, whether they can apply for college qualifications, and how to enroll students after the implementation of college qualifications to increase the scale of students.
Risks related to tuition fee increase: Higher education needs to take care of social welfare, has the characteristics of public utilities, needs to weigh the capital's profit-seeking sexual desire for social welfare, and investors need to pay attention to whether they can continue to increase tuition fees like similar overseas institutions.
Policy-related risks: The Regulations for the Implementation of the Civil Promotion Law have not yet been formally promulgated, and if the policy is unfavorable, it will bring greater operational risks.
M&A-related risks: There are risks such as M&A not meeting expectations, insufficient M&A funds, and post-M&A integration not meeting expectations
Iii. Introduction to the 20/21 school year plan
Holley College's 20/21 academic year places were significantly lower than expected, representing a decrease of about 2,000 fewer than the Group's expected 6,300 students. Holley College plans to increase the average tuition fee by 10% for the 20/21 academic year.
Holley Vocational College plans to increase the average tuition fee for 20/21 academic years by 8%.
Holley Technician College's recruitment is mainly junior high school graduates, the proportion may reach 85%, junior high school graduates after entering the school course for five years, Holley Technician College's student size will maintain 9,000 people and there is a possibility of growth