Investment strategy of the education industry in 2022: Policy dust landing, vocational education has great prospects

Macro: in terms of population, the increase of gross enrollment rate offset the decline of birth rate, and the change of job to general ratio expanded the scale of secondary vocational schools. In terms of finance, the investment in education is mainly compulsory education, and higher education still needs the support of private funds. In terms of policy, compulsory education is strictly controlled, and vocational education is very good.

Industry: vocational education with academic qualifications is good, and there is still demand for non academic training.

1) Education - Higher Education: policy risks are gradually eliminated, and the endogenous extension power is sufficient. Higher education policies are multi-faceted and beneficial: ① the implementation regulations of the people's promotion law have not limited the M & A, agreement control and related party transactions of higher education group, and the extension risk of higher education has been eliminated. ② According to the opinions on the development of vocational education, the enrollment scale of vocational undergraduate accounts for 10% of that of higher vocational colleges, and the corresponding enrollment scale target of vocational undergraduate is about 600000. At present, there are only 39 vocational undergraduate, with a large gap; In the future, higher education group is expected to benefit from the increment of vocational undergraduate places in two ways: one is to set up vocational undergraduate majors for its private application-oriented undergraduate, and the other is to upgrade high-quality junior colleges to vocational undergraduate. ③ The opinions on the development of vocational education are aimed at opening up the channels for secondary vocational education, improving the willingness of secondary vocational students to study, strictly regulating the ratio of vocational education to general education, and ensuring the expansion of secondary vocational enrollment. The overall performance of fy2021 higher education sector has achieved medium and high-speed growth, with an average growth of about 30% for students, and an increase of more than 30% for income and net profit. In fy2022, only considering the internal growth, the average growth rate of the six higher education companies that announced the number of students in the new academic year of 21 / 22 was 15%, which was lower than that in the academic year of 21 / 22, but there may be some increase in the number of students brought by merger and consolidation at the end of fiscal year 22. The tuition fee growth of higher education companies remained stable.

2) Non academic - vocational training: deepen the integration of industry and education and expand the layout of academic education. Vocational training institutions maintain close cooperation with employment enterprises, pay close attention to industry hot spots and ensure the effectiveness of training contents. By 2020, China Oriental Education has signed school enterprise cooperation plans with 28000 enterprises, opened order classes according to enterprise needs and trained counterpart employees. Vocational training institutions actively arrange academic education to attract users with different needs and cope with the impact of academic education. As of October 2021, China Oriental Education has 43 secondary vocational licenses, of which 7 are senior technical schools.

3) Non academic - recruitment training: the recruitment in the national examination has reached a new high, and the admission proportion will drop again. In 2022, the recruitment market continues the trend of enrollment expansion, with 31200 people enrolled in the national examination and expanding the recruitment of training customers. The admission rate shows a downward trend. This year, 2.12 million people have passed the examination in the national examination registration, a record high. At the same time, the admission rate is 1.5%, continuing the downward trend since 2019. The recruitment market competition is extremely fierce, stimulating the willingness of examiners to participate in training.

4) Non academic - K12 training: K9 business stops and adult and quality training starts again. Tal, New Oriental, gaotu and Youdao have successively announced that they will end K9 discipline training business before December 31, 2021 and transform to adult education (postgraduate entrance examination, public examination, etc.), quality education (Science, sports, programming, etc.) and educational hardware (Dictionary pen, listening treasure).

Company: under the favorable background of clear policies, we suggest paying attention to China Education holding, hope education, Yuhua education, China Science and technology training, Neusoft education, etc. in the field of private higher education, and paying attention to Shanghai Action Education Technology Co.Ltd(605098) , Jiangsu Chuanzhiboke Education Technology Co.Ltd(003032) , China Oriental Education, etc. in the field of vocational training.

Risk tips: 1) risk that endogenous growth is less than expected; 2) The risk that the progress of profit-making selection is less than expected; 3) The risk that the M & a landing is less than expected due to policies, target richness, funds and other reasons.

 

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