On December 28, the leading listed company Offcn Education Technology Co.Ltd(002607) (002607, SZ; yesterday’s closing price was 7.88 yuan / share) replied to the attention letter of Shenzhen Stock Exchange.
Due to the great change in the performance of the third quarterly report in 2021, Offcn Education Technology Co.Ltd(002607) received two attention letters in just a few months. In the reply announcement to the second attention letter on December 28, Offcn Education Technology Co.Ltd(002607) said that according to the statistics of its financial department, the refund amount from January to September 2021 was 12.397 billion yuan, with a refund ratio of 65.81%. In addition to the adverse impact of the reduction in the number of participants on the performance, the high refund rate has also become the reason for the decline of Offcn Education Technology Co.Ltd(002607) performance.
In the face of the high refund rate this year, Offcn Education Technology Co.Ltd(002607) said that this was due to the decline in the number of public recruitment in 2021, and the national standardization of the after-school training market, which led some after-school training enterprises to enter the field of vocational education, intensified market competition, and the increase in the proportion of high refund shifts in Offcn Education Technology Co.Ltd(002607) in 2021, resulting in an increase in the overall refund rate in 2021 compared with previous years.
On the other hand, Offcn Education Technology Co.Ltd(002607) said that student loans also directly pushed up the refund rate of agreed classes, which was the main reason for the high refund in the fourth quarter of 2020 and the first three quarters of this year.
Behind the performance decline of : the agreed shift refund ratio in the first three quarters exceeded 65%
If the student fails the examination or the civil servant is not admitted, the fee can be refunded in part or in full. As a leading enterprise in the public examination industry, the agreement class provided by Offcn Education Technology Co.Ltd(002607) is characterized by partial or full refund, and the training price of the agreement class is significantly higher than that of the ordinary class of Offcn Education Technology Co.Ltd(002607) . However, since this year, the high refund rate of the agreement class has become one of the reasons for the sharp year-on-year decline in Offcn Education Technology Co.Ltd(002607) revenue and its core business – civil service sequence training revenue.
According to the attention letter of Shenzhen Stock Exchange, Offcn Education Technology Co.Ltd(002607) in the first three quarters of 2021, the number of participants and income of civil servants decreased by 16% and 11% respectively compared with 2019 and 42% and 21% compared with 2020.
In this regard, Offcn Education Technology Co.Ltd(002607) said that in the first three quarters of 2021, the revenue of civil service training decreased year-on-year, mainly due to the lower than expected collection and the higher increase of refund.
According to the announcement of Offcn Education Technology Co.Ltd(002607) , the overall refund amount of the agreement class has been rising in recent years. Among them, the refund amount in 2019 is RMB 7.423 billion, with a refund ratio of 44.14%; the refund amount in 2020 is RMB 10.009 billion, with a refund ratio of 46.54%; from January to September 2021, the refund amount is RMB 12.397 billion, with a refund ratio of 65.81%.
As for its core business – Civil Servant sequence training, the refund amount increased significantly in the first three quarters of this year, Offcn Education Technology Co.Ltd(002607) explained that with the fierce market competition this year, the proportion of high refund classes launched by the company has increased, but when the recruitment announcement and the number of recruits have not increased significantly, it is more difficult to improve the pass rate, resulting in an increase in refund.
In addition, Offcn Education Technology Co.Ltd(002607) said that although the use of student loans has expanded the source of students participating in the training, some students do not pay enough attention to the training and insufficient preparation for the examination. As a result, the passing rate of students using loans is significantly lower than the normal passing rate of the company, which also leads to higher refund rates.
On the other hand, due to the advance of the joint examination of provincial civil servants in 2021, Offcn Education Technology Co.Ltd(002607) pointed out that the shortened preparation time for the examination students weakens the students’ willingness to participate in the training, which affects the reduction of the number of participants recruited by the company, and adversely affects the curriculum arrangement of the company. Some long-term classes cannot be carried out and are replaced by non long-term classes. This also affected its revenue in the first three quarters.
However, Offcn Education Technology Co.Ltd(002607) believes that its market share has not decreased significantly, and said that the use of student loans has consolidated the original market share and further increased the number of trainees.
response to the question of double high deposit and loan: sufficient funds are needed to deal with possible refund
In addition to the sharp decline in income, Offcn Education Technology Co.Ltd(002607) another concern of double high deposit and loan was mentioned again. In the reply to the previous inquiry letter, Offcn Education Technology Co.Ltd(002607) said that it needed sufficient funds to deal with possible refund.
However, in the second letter of concern, Shenzhen Stock Exchange pointed out that Offcn Education Technology Co.Ltd(002607) at the end of 2018, 2019 and 2020, the amount of monetary funds, time deposits and financial products after deducting contract liabilities (advance receipts) was 2.781 billion yuan, 3.768 billion yuan and 3.994 billion yuan, which was still greater than the amount of short-term loans.
In response, Offcn Education Technology Co.Ltd(002607) replied that the balances of monetary funds, time deposits and financial products in each year and at the end of each year were true, and the amount and balance of bank short-term loans were true, and said that there were many factors that needed sufficient funds. Among them, as mentioned earlier, under the agreed shift mode, sufficient funds are required to deal with possible refund. According to the announcement of Offcn Education Technology Co.Ltd(002607) , the income of the agreement class is always maintained at about 75% of the total income. In view of the fact that most of the tuition fees of the agreement class students need to be refunded, from the perspective of stable operation, the company needs to maintain a certain scale of monetary funds or assets that can be realized in time to deal with the possible return of the agreement class.
In addition, Offcn Education Technology Co.Ltd(002607) pointed out that due to the strong seasonality of cash flow from operating activities, the company needs to borrow some short-term bank loans to meet the seasonal capital demand.
On the other hand, since 2018, Offcn Education Technology Co.Ltd(002607) has not stopped the pace of expansion, and its business scale and branches are growing. It is pointed out that Offcn Education Technology Co.Ltd(002607) has purchased and constructed learning and office places in Shandong, Jilin, Liaoning, Shaanxi, Beijing and other places, so it has a certain demand for funds.
In order to improve the company’s anti risk ability, the funds consumed by operating losses have also been Offcn Education Technology Co.Ltd(002607) included in the reasons and uses of its continuous new debts under the condition of abundant monetary funds. Offcn Education Technology Co.Ltd(002607) said that in order to deal with the potential risks caused by the repeated impact of the epidemic, the company increased its cash reserves through bank loans to improve the company’s risk resistance. In addition, since this year, the state has successively issued a series of policies to regulate the after-school training market, and put forward a series of normative requirements for the vocational education and training industry where Offcn Education Technology Co.Ltd(002607) is located, such as the setting conditions of offline outlets, fire safety, shift management, charge management, advertising investment, etc., which also have an impact on Offcn Education Technology Co.Ltd(002607) . Offcn Education Technology Co.Ltd(002607) pointed out that this led to a negative operating net cash flow in the first three quarters of 2021, resulting in a large amount of operating losses.
After the reply announcement was disclosed yesterday, as of the closing on December 29, Offcn Education Technology Co.Ltd(002607) shares rose 1.81% to close at 7.87 yuan / share. As of the closing on December 30, Offcn Education Technology Co.Ltd(002607) shares rose 0.13% to close at 7.88 yuan / share.
(Daily Economic News)
