Exceeding market expectations, Tianli International Holdings (01773) handed over a beautiful report card.
Zhitong Financial APP learned that on November 23, Tianli International Holdings released its 2023 fiscal year results, achieving revenue of RMB 230.3 billion yuan, a year-on-year increase of 1603%, adjusted net profit for the year of RMB36.6 billion yuan, a year-on-year increase of 2764% and adjusted net profit margin of 1588%, an increase of 4 percent year-on-year91 percentage points;During the reporting period, the number of high school students enrolled was 25,524, a year-on-year increase of 485%。The Company intends to pay a final dividend of RMB2 per share34 cents, annual dividend of RMB 477 points, payout ratio of 30%.
In fact, in the past few years, affected by the education policy, the company is committed to diversification and transformation, and has formed a "one-work, multi-branch" business system that mainly focuses on for-profit high schools and provides students with a series of other value-added services related to education. Tianli's transformation has achieved remarkable results, and its revenue in fiscal year 2023 has reached a record high.
The performance is growing at a high rate, and the profitability continues to improve.
Looking at the financial report of Tianli International Holdings, from the perspective of time cycle, before fiscal year 2020, its performance maintained stable growth, and in fiscal year 2021, the performance of the junior business declined due to the impact of education policies, but after the rapid recovery of business adjustment and transformation performance in the next two years, it will achieve a qualitative breakthrough in fiscal year 2023. In the 2021-2023 fiscal year, the company's revenue compound growth rate is as high as 1549%, after smoothing fluctuations, the compound growth rate of 2019-2023 fiscal year is 2585%。
From the perspective of revenue structure, the company has formed a diversified income model of comprehensive education services, restaurant operations, sales products, management and franchise fees, serving customer groups such as students' parents with basic education as the scenario, with high business synergy and steady growth in performance. For fiscal year 2023, the revenue share of these businesses is as follows: 1% and 17%, of which comprehensive education services are the core business, driven by the high school business and literacy course services, with revenue of 122.3 billion yuan, a year-on-year increase of 2538%。
Tianli International Holdings has built a diversified business structure to drive the rapid recovery of performance revenue and achieve a steady improvement in profitability. Gross profit for fiscal year 2023 was 77.9 billion yuan, with a compound growth rate of 258 in fiscal year 2021-20238% and a gross margin of 3383%, an increase of 1629 percentage points, while net profit benefited from the simultaneous increase in gross profit, with a core net profit margin of 1589%。
It is worth mentioning that due to policy factors in fiscal 2021, the company made a provision of 10The asset impairment of 8.5 billion yuan has not been provided for since then, and the affected K12 schools have also continued to make optimizations, and for-profit high schools with independent operating licenses have been independently established in integrated schools, and high-quality assets have driven performance improvement. In addition, the company has adopted cost reduction and efficiency improvement expense optimization, and the administrative and selling expense ratios for fiscal year 2023 are 10., respectively42% and 157%, of which the administrative expense ratio decreased by 46 percentage points and a decrease of 18 compared to FY202106 percentage points.
ROE is the most important earnings indicator for investors, and Tianli International Holdings' ROE has also continued to rise, reaching 158%, a significant increase of 107 percentage points. The company has also paid a very generous dividend, which has never been interrupted since its listing, with a dividend of 4. per share in fiscal 202377 points, payout ratio of 30%.
High school education is strong, and diversified businesses go hand in hand.
As of the fall semester of 2023, Tianli International Holdings has a total of 50 schools, covering 33 cities, with 100,037 students, a year-on-year increase of 216%, while there were 36,708 high school students, an increase of 438%, maintaining a mid-to-high double-digit growth rate, accounting for 37%. Within the school network, the company has a total of 37 high schools, which are expected to accommodate up to about 100,000 high school students, and there is a lot of room for growth.
As of the end of fiscal year 2023, the company has established five for-profit high schools in the integrated schools. At present, 30 schools are not included in the consolidated financial statements due to the impact of the policy, including 6 integrated schools (including elementary, junior high and high schools), and it is expected that more high schools will continue to be independent and return to the balance sheet in fiscal 2024.
It has been observed that under the influence of private basic education policies, K12 education companies are basically transforming. There are two main directions of transformation: one is the transformation towards vocational education, representing such as Yuhua Education and Bojun Education;The second is to focus on high school education and develop diversified businesses, which are mainly held by Tianli International.
So why should the company focus on high school education?
The "Outline of the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives for 2035" requires the gross enrollment rate of high school education to increase to more than 92%, and the "Opinions on the Implementation of the Action Plan for the Expansion and Quality Improvement of Basic Education in the New Era" also points out that it is necessary to expand the enrollment scale of high-quality general high schools in an orderly manner, and encourage the diversified development of ordinary high schoolsAt the same time, the scale of the private high school market in the industry has maintained consistent and steady growth, and in 2022, the number of students in private high schools will account for 18% of the total number of students in the country, an increase of 9 percentage points compared with 2010, and the future prospects of the private high school market are clear.
Secondly, Tianli International Holdings has integrated schools, and the transformation of high school education in line with the policy trend has the advantage of being a matter of course, even if its K9 is no longer consolidated due to the impact of the policy, it still provides high-quality education services, and its K9 sector can still send more students to independent high schools under the consistent teaching service. More importantly, the company teaches students according to their aptitude, cultivates multi-type talents, and has a good reputation in the industry in the field of high school teaching, which has been recognized by students' parents. According to the financial report, the company will have about 83 in the 2023 college entrance examination5% exceeds the cut-off score for undergraduate admissions to Chinese universities, and about 503% exceeded the cut-off score for admission to China's first university, and 127 high school graduates were admitted to the world's top 50 universities such as Tsinghua University and Peking University, an increase of 48 from 2022. In addition, under the strategy of diversified further studies, a total of 14 students won the first prize in the provincial division of the national league in the five major competitions of physics, chemistry, mathematics, biology and information technology, 6 students were selected for the provincial team and won 1 gold medal, 2 silver medals and 3 bronze medals in the national finals, and 1 person was selected for the national training team and was escorted to Tsinghua University.
Tianli International Holdings' multi-branch business strategy will be built on the basis of self-operated high school and primary school trusteeship, with the expansion of the school's basic scale, comprehensive education + value-added services synergistic two-wheel drive performance sustainable growth. As of August 31, 2023, the Company had cash and cash equivalents of approximately RMB150.2 billion yuan, in the future, it is not excluded to expand the brand of high schools through acquisitions or through the asset-light model of management output, and other value-added business development potential is not excluded from exploring more income-generating and profit models.
Increase in holdings + repurchase to stabilize market confidence, and there is a lot of room for valuation to return.
Tianli International Holdings has strong fundamentals, its performance has entered the fast lane of high growth, and it has won the support of shareholders and management, and is optimistic about long-term development. Mr. Luo Shi, Chairman of the Board of Directors and Chief Executive Officer of the Company, has increased his shareholding in the Company several times since the implementation of the Civil Promotion Law Regulations, and has increased his holdings by nearly 30 million shares since 2021, with a shareholding ratio of about 418%；The company's core shareholder, First Beijing Investment Limited, has also maintained a simultaneous increase in its holdings, and its shareholding has risen to 9% so far.
In addition, in order to enhance market confidence, the company announced the launch of a share repurchase program of up to HK$200 million on July 20. According to the company's disclosure on the next day, since the implementation of the repurchase policy on July 26, the company has repurchased 39 times, with a total of 1,810 shares repurchased50,000 shares, with a total repurchase amount of approximately HK$47 million.
It is worth noting that the company has also regained the attention and recognition of the capital market, among which Tianfeng ** has made three additional research reports in the past three months, saying that the company's executives have increased their holdings + started to repurchase to show confidence, and since the transformation, the business adjustment and high school development have been accelerated, and the school utilization rate may continue to increase in the next few years, and the business and performance scale are expected to grow rapidly, giving ** rating. According to Futubull Software, driven by performance, the company's market value has risen by 25% in the past week, and this year's market value has increased by 4283%, outperforming the Hong Kong stock education sector by 5381 percentage points.
On the whole, the high growth of Tianli International Holdings' performance in fiscal year 2023 has delivered a satisfactory answer to the market, and the company's transformation and development of the "one trunk and multiple branches" business strategy has achieved remarkable results, which has been unanimously recognized by shareholders, management and the capital market, and supported by the increase in holdings of real gold. The company's current valuation is low, but under the stable dividend policy, the earnings increase brings a considerable dividend yield expectation, which is expected to attract more value investors.
The performance of Tianli International Holdings has broken through the historical high, but the valuation is only two percent of the previous high, and there is a lot of room for return.
Disclaimer: The content of this article is this *** corporate information, which only represents the author's personal views and has nothing to do with this website. The content involved does not constitute investment and consumption advice, and is for readers' reference only, please verify the relevant content by yourself.
Original text**: Xinyang**.