Recently, the Hong Kong market has continued to languish.
As of December 1, the Hang Seng Tech Index has seen six consecutive negative results;The Hang Seng Index and the State-owned Enterprises Index have both fallen for 5 days in the past 6 trading days.
Just when the market was depressed, the private higher education sector came out of independence, including the ** education sector and the K12 education sector have successfully recorded 5 consecutive yangs, with a cumulative increase of .2%, significantly outperforming**.
Related concept stocks also soared. Among them, Scholar Education (01769.)HK) soared, with a cumulative increase of more than 110% in the past 10 trading days. In addition, New Oriental-S (09901.)HK), Chengshi Foreign Education (01565.)HK) and so on have raised the banner of ** for 5 consecutive trading days, and their performance is remarkable.
Recently, education stocks have been able to rise against the trend, mainly due to catalysts. According to market analysis, since the beginning of the year, the education sector is generally on the track of rapid recovery of fundamentals, and at the same time, with the policy assistance of vocational education, the education sector has shown a trend of joint recovery of performance and valuation sentiment.
There are signs of recovery in the industry's prosperity
Recently, a number of listed education companies have released their latest financial reports, and on the whole, the income is generally improving, and the industry's prosperity has shown signs of recovery, which has aroused the attention of investors.
Take New Oriental-S (09901.)HK) as an example, the first quarter of fiscal year 2024 (ending August 31, 2023) shows that after nearly two years of adjustment, New Oriental's education business is slowly "picking up". In the first fiscal quarter of 2024, New Oriental's overseas test preparation and overseas consulting business revenue increased by 51% year-on-year, respectively7% and 266%, and the domestic test preparation business for ** and college students increased by about 255%。
In fiscal year 2023 (as of August 31), Chengshi Foreign Education (01565HK) revenue increased by 383% to 76.2 billion yuan;The net profit attributable to the parent company rose by 183 year-on-year5% to 322630,000 yuan. The company is a comprehensive private education service provider, mainly covering K-12 education from preschool to high school 12th grade, higher education and international education. So far, the company has opened 29 K-12 schools and two universities.
Thanks to the scale effect brought about by the recovery of market demand and the expansion of enrollment, China Chunlai (01969HK) has also achieved impressive results. Fiscal year 2023 (ended August 31) revenue of 149.8 billion yuan, a year-on-year increase of 144%；Net profit attributable to shareholders 68.4 billion yuan, a year-on-year increase of 239%。
The CITIC ** research report pointed out that since the beginning of this year, some education subdivisions have shown a significant economic reversal trend, such as education and training, public examinations, etc., the bank believes that with the positive changes in the education industry, some of the top excellent companies are expected to show strong growth potential.
Vocational education has been supported by policies, and valuations are expected to be restored
At present, China is ushering in a stage of economic transformation, and industrial upgrading has brought about an expansion in demand for talents, and the demand for higher education is increasing.
At the policy level, in recent years, China** has launched a series of favorable policies to continue to support and encourage the development of vocational education. At the end of 2022, the "Opinions on Deepening the Construction and Reform of the Modern Vocational Education System" clearly stated that it is necessary to improve the vocational education college entrance examination system and expand the enrollment scale of application-oriented undergraduate schools in the vocational education college entrance examination.
In May this year, the Ministry of Finance and the Ministry of Education issued the Notice on Issuing the Budget for the 2023 Modern Vocational Education Quality Improvement Plan. In June, 8 departments including the state announced the "Implementation Plan for the Empowerment and Improvement of the Integration of Industry and Education in Vocational Education (2023-2025)", proposing to add about 200 higher vocational colleges and application-oriented undergraduate colleges to give key support to the vocational education integration projects that are included in the reserve project library and meet the requirements.
Under the vigorous promotion of a series of policies, China's vocational education industry has developed rapidly. According to the previous disclosure, there are currently more than 10,000 vocational colleges and more than 30 million students in China, and the scale of vocational education talent training has accounted for half of China's higher education, containing huge talent dividends.
In order to seize business opportunities, many private higher education enterprises are expanding rapidly through organic growth and extended mergers and acquisitions. For example, China Education Holdings, a leader in the field of vocational education (00839HK) had only 3 self-built schools at the beginning of its listing in 2017, but as of August 2023, the number of self-built schools has increased to 14, and the number of full-time students has increased to 2480,000 people. Hope Education (01765.)HK) increased from 16 in FY2020 to 22 in FY2023, and the number of students enrolled in the school increased from 1950,000 to 290,000.
According to the research report of Soochow, vocational education and higher education are currently a subdivision of the education industry that is less affected by external factors, which belongs to the direction of policy encouragement, and vocational education may usher in major development opportunities in the future.
According to the data of the Puhua Research Institute of the China Research Institute, it is expected that the scale of China's vocational education market will reach 902.9 billion yuan in 2023, and the market size will exceed 1 by 20253 trillion yuan.
Huaxi ** pointed out that in the context of sluggish economy and consumption, the bottom direction of education policy is clear, which is one of the more certain investment directions, and vocational education and science and technology education are the most favorable directions in the medium and long term.
CITIC ** said that based on the current demand prosperity, supply pattern, and performance certainty and growth of various education segments, it is recommended to pay attention to three main lines: 1) the head education and training companies that are actively transforming and re-entering the growth of performance;2) Vocational training companies with high demand prosperity & the industry ushered in the best vocational training company;3) Higher education companies with historically low valuations, high performance certainty, and are expected to gradually usher in valuation repair.
Author: Bottle.