On October 12, 2021, the China office and the State Office jointly issued the opinions on promoting the high-quality development of modern vocational education, which aims to solve the contradiction of “structural mismatch of labor market under China’s industrial economic upgrading and serve the construction of a skilled society”.
By 2025, it is expected to contribute nearly 800000 secondary vocational education increment and more than 500000 vocational education undergraduate increment. 1) In terms of secondary vocational education, at present, China’s vocational education is not attractive enough. The ratio of vocational education to general education in 2020 is about 42%: 58%, which has not reached the goal of diversion in the fifth five year plan; It is expected that the enrollment rate of secondary vocational schools will not exceed 30%, and there is still room for improvement. Under the guidance of the policy of opening up the undergraduate of vocational education and the five-year diversion of vocational education and general education, the training cycle of secondary vocational education is expected to be prolonged and the enrollment scale is expected to be expanded in the future. It is expected that the number of secondary vocational students will increase by nearly 800000 by 2025. 2) In terms of higher vocational education, the proportion of undergraduate enrollment in China’s vocational education accounts for less than 1% of the enrollment in higher vocational education. Under the guidance of the policy of realizing 60% gross enrollment rate of higher education and no less than 10% undergraduate enrollment of vocational education during the 14th Five Year Plan period, the number of undergraduate enrollment of vocational education is expected to gradually increase in the future, and it is expected that the increment of enrollment will exceed 500000 by 2025; Due to the limited number of vocational education undergraduate universities, it is estimated that the increase of 450000 vocational education undergraduate students may be carried out by application-oriented undergraduate students, and private higher education is expected to benefit from it.
Insufficient financial investment, low market concentration and broad development space in the future. At present, China’s financial investment does not match the scale of vocational education, the proportion of Higher Vocational financial expenditure is low, and the average education expenditure of vocational education students is lower than that of general education at the same level. Private higher education has limited sources of funds, mainly relying on tuition income (about 80% – 85%), national financial education funds (about 10%), sponsor investment (2% – 2.5%), social donation (0.5% – 1%) and other income (3% – 5%). The limited large-scale expansion leads to low market concentration, and the Cr5 of private higher education and secondary vocational education is less than 5%. However, there is a broad market space in the future. It is estimated that by 2030, the scale of private secondary vocational education will exceed 80 billion yuan and the scale of private higher education will exceed 300 billion yuan.
Investment suggestion: the policy encouragement orientation is clear, and the next 5-10 years will usher in a golden period of development. On the one hand, under the guidance of policies such as insufficient demand for senior skilled talents, opening up the undergraduate system of vocational education and the five-year diversion of vocational education and general education, the social attraction of vocational education and the source of secondary vocational students are expected to gradually improve in the future, and private vocational education is expected to benefit from the expansion of enrollment. On the other hand, the policy strongly encourages academic vocational education and actively supports non academic vocational education and training. Under the background of the slowdown of macroeconomic growth and the intensification of employment competition caused by the increase of the scale of graduates year by year, non academic vocational education and training is also expected to enjoy more dividends. Related subjects mainly include: Jiangsu Chuanzhiboke Education Technology Co.Ltd(003032) , Shanghai Action Education Technology Co.Ltd(605098) . Maintain the rating of “synchronous market” in the industry.
Risk tips: changes in policy and supervision; Intensified market competition; Enrollment scale and M & A integration were lower than expected.
