On the evening of March 9, the China concept stock education sector ushered in a general rise. As of the closing, gaotu group rose 23.57%, New Oriental rose 7.69%, tal rose 17.2%, Netease Youdao rose 4.02%, education technology rose 19.88% and elite education rose 10.75%.
Recently, online education enterprises have successively released the latest financial report. Although there are double minus factors, the financial data of many online education enterprises are better than market expectations. Morgan Stanley pointed out in a research report released recently that the head enterprises are establishing advantages in their respective fields after completing the K9 discipline training business.
several companies performed better than expected
On March 9, education technology, a US listed education company, announced the fourth quarter of 2021 and the full year of 2021. In the fourth quarter of 2021, the company achieved a revenue of 543 million yuan, an increase of 11.5% year-on-year. In 2021, the company achieved a revenue of 2.185 billion yuan, an increase of 68.8% year-on-year.
It is worth mentioning that in the fourth quarter of 2021, an educational technology realized a net profit of 17 million yuan under non-U.S. GAAP, which is the first time that the company realized profit.
At the end of 2021, a group of educational technology closed K12 counseling business and relied on the transformed business to generate income. The company expects that the revenue recognized in the first quarter of 2022 will reach 200210 million yuan. At the same time, the company expects to continue to make profits under non US GAAP.
On March 8, the financial report of gaotu group, a US listed company, also showed that in the fourth quarter of 2021, the company achieved a revenue of 1.27 billion yuan, an increase of 14.3% month on month, and a non US GAAP net profit of 320 million yuan.
The data previously released by Netease Youdao, a Chinese concept company, showed that under non US GAAP, the company achieved a net profit of 31 million yuan in the fourth quarter of 2021, achieved quarterly profit for the first time and realized positive operating cash flow. In 2021, the company realized a net income of 4.016 billion yuan, a year-on-year increase of 58.9%.
For the realization of profitability, Netease Youdao is attributed to the sharp decline in the company’s marketing expenses after the compliance adjustment in 2021.
Earlier, the financial reports released by online education companies, including tal and New Oriental, showed that their losses increased significantly due to the impact of double reduction. The latest financial data released by online education companies such as Tonghua education has increased confidence for online education enterprises generally facing transformation problems.
transformation path gradually clear
“Online education enterprises have different income scales from subject training, different business structures and different impacts. At present, the relatively good situation basically belongs to ‘small ship and good turn around’, and they have accumulated in other business directions and can respond quickly and make comprehensive transformation.” Zhang Xuan, a partner of an education industry fund in China, said in an interview with the securities times.
“Before, the income growth of online education institutions was highly dependent on the investment of marketing expenses, and the financial situation was unhealthy. Now, although the income of discipline training has disappeared, its investment cost has also been greatly reduced. If the new business direction can be clarified as soon as possible, it is expected to achieve a relatively stable transformation.” Zhang Xuan said.
After the gradual closure of discipline training business, major online education enterprises have actively explored new businesses that meet their own development needs. After a period of attempt, many online education enterprises have defined a clear transformation path.
For example, education technology said that the company completed the shutdown of K12 teaching and training services, with clear business transformation and rapid progress. At present, the company has transformed into a SaaS software service provider focusing on core scenarios such as homework and helping China’s basic education digital transformation and upgrading.
Gaotu education is transforming to the fields of adult education and training, vocational education and training and intelligent digital products. Netease Youdao has defined the four pillar businesses of intelligent hardware, quality education, adult education and educational informatization. In the fourth quarter of 2021, the shipment of Youdao dictionary pen launched by Netease Youdao exceeded 500000.
In addition to transforming to educational products and services unrelated to K9 discipline training services, such as exam preparation courses, adult language and training courses, New Oriental also continues to look for new business opportunities in after-school hosting, live delivery and other fields.
At present, the implementation of double reduction is still an important work in the field of education this year. From then on, the scope of K9 high school and preschool education is being promoted in some areas.
In this regard, Yu Lian, a senior education industry practitioner, said in an interview with the reporter of the securities times that the space of online education companies in the original discipline training business is further reduced, which is conducive to strengthening the confidence of enterprises in comprehensive transformation. In the short term, large enterprises may not be able to fully make up for the income gap through new businesses, while the transformation of enterprises with relevant business foundation may be relatively smooth.
organization: the worst is over
With the release of the latest financial data and the further clarity of the policy, the discussion on whether the online education field is “bad” has heated up again since the second half of last year. Recently, some institutions have sent positive signals to the online education industry.
According to edu guide, Morgan Stanley pointed out in its Research Report on China’s education sector recently that the current demand for learning services in China is still strong, and head companies are building advantages in their respective fields after ending K9 discipline training business.
Morgan Stanley believes that the market sentiment towards the sector is still low, but the worst is over. In the future, the non subject counseling and educational hardware market dominated by quality education will usher in favorable demand growth.
Shenwan Hongyuan Group Co.Ltd(000166) in commenting on the financial report of New Oriental, he believed that the one-time impact of the double reduction policy on the company had been basically cleared Orient Securities Company Limited(600958) when commenting on the fourth quarter financial report of Netease Youdao in 2021, it also pointed out that the company’s K9 business income has been stripped off in the quarterly report, the company’s business adjustment has been completed, and its hardware business and quality education have outstanding growth.
From the market situation, since the second half of last year, although the share price of online education enterprises has rebounded occasionally, it still continues to decline as a whole. At present, the share price of online education enterprises is still generally low.
