This week’s view
On Friday evening, the CSRC made it clear for the first time that the vie structure is legalized, and vie structure enterprises that meet the compliance requirements can be listed abroad after filing.
On Friday, hope Education announced that 50 million yuan will acquire 100% equity of Shuanglin education. At the same time, hope education will loan 182 million yuan to Shuanglin education with a term of one year and an annual interest rate of 12%. The loan will be used to buy 400 mu of land and can be used to build a modern industrial college characterized by intelligent rail transit, Internet of things and large data in the future. Shuanglin education is mainly engaged in education consulting services. The net profit in the first 11 months of 2021 is – 1.55 million yuan, the book price is 48.4 million yuan, and the acquisition of Pb is about 0.97 times.
At present, We recommend two main lines: (1) Vocational Education: Shanghai Action Education Technology Co.Ltd(605098) , Jiangsu Chuanzhiboke Education Technology Co.Ltd(003032) ; (2) Higher education: at present, some higher education stocks 22pe have fallen below 10 times, mainly due to: 1) higher education companies are cautious about mergers and acquisitions, partly due to the current upside down valuation of the primary and secondary markets; 2) at present, most regions have not issued detailed rules for the selection of business and non business, and the market is worried about the policy risk of higher education stocks; 3) concerns about the future price increase and the ceiling of net interest rate. We believe that, On the one hand, the performance of higher education sector continues to be stable. On the other hand, the state accelerates the implementation of vocational undergraduate work, and private undergraduate schools are expected to benefit. They continue to recommend China Education Holdings, hope education, Gaoxin education group, Zhonghui education, China Science and technology training, etc.
Market review: underperformed the Shanghai Composite Index by 3.62%
This week, CITIC education index fell 3.27%, Shanghai index rose 0.35%, underperforming the market by 3.62%. So far in 2021, CITIC education index has fallen by 52.69%, Shanghai index has fallen by 9.62%, and underperformed the market by 43.07%.
Industry news
On December 21, the Ministry of Education held a press conference to introduce the implementation of the “double reduction” from both inside and outside the school. It was mentioned at the meeting that discipline training has been significantly reduced. At present, offline off campus training institutions have been reduced by 83.8% and online off campus training institutions have been reduced by 84.1%. Part of the remaining training institutions will be turned into non-profit institutions and the government guided price will be implemented; Those unsuitable for non transfer will be further cancelled. In the governance of after-school training institutions, the Ministry of education took the lead in establishing a special coordination mechanism for “double reduction” composed of 19 departments, including the national development and Reform Commission, the Ministry of public security, the Ministry of human resources and social security and the General Administration of market supervision; Issue supporting documents, such as clarifying specific requirements for training materials and personnel management, implementation of government guided prices, pre charge supervision, clean-up and rectification of listed companies, and strengthening sports training supervision; Tiktok, WeChat, nail and other platform enterprises are actively conducting clean-up work.
Risk statement
Uncertainty of epidemic impact: the progress of epidemic recovery has an impact on offline education. Risk of policy change in the education industry: the policy change in the education industry affects the enrollment and fees of K12, vocational education and higher education companies. The risk of enrollment not reaching the expected number: the weakening of terminal demand or the weakening of the enterprise’s own advantages make enrollment difficult.
