Weekly report of education industry: Ministry of Education: strike hard in winter vacation and conduct illegal training in the name of “domestic service”

This week’s view

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 M & A expectations, partly due to the current upside down valuation in the primary and secondary markets; 2) At present, most regions have not yet 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 future price increases and the ceiling of net interest rates. 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. We continue to recommend China Education Holdings, hope education, Gaoxin education group, Zhonghui education, China Science and technology training, etc.

Market review: outperforming the Shanghai Composite Index by 0.09%

This week, CITIC education index fell 1.47%, Shanghai index fell 1.56%, outperforming the market by 0.09%. So far in 2021, the CITIC education index has fallen by 1.47%, and the Shanghai index has fallen by 1.56%, outperforming the market by 0.09%.

Industry news

On January 4, Shanghai Xinnanyang Only Education & Technology Co.Ltd(600661) announced that the company plans to participate in the judicial auction through the wholly-owned subsidiary pertu enterprise within the amount authorized by the board of directors. The 99.6% property share of Xiling Qiyu held by the education fund of Xiling Jiaotong University. From 10:00 on January 4, 2022 to 10:00 on January 6, 2022, the 99.6% property share of Xiling Qiyu held by Xiling Jiaotong University Education Fund will be publicly auctioned on Taobao at the starting price of RMB 800000. If the auction is successful, the company’s wholly-owned subsidiary, PAMI enterprise, plans to transfer 0.4% of the property share of sailingqiyu with a consideration agreement of 0 yuan, and adjust the equity structure of sailingqiyu’s subsidiaries after pertu enterprise and PAMI enterprise hold 100% of the property share of sailingqiyu, so as to dispose of sailingqiyu and obtain 100% equity of its core asset star company. Star is an SPV (special purpose entity) holding 100% equity of Astrum group. Astrum group’s business is divided into local business in the UK and collaborative business in China. Astrum group has more than 45 cooperative kindergartens and primary schools, and its two private schools, Kensington public school and Chelsea independent school, are located in the core areas of London such as Hyde Park and Fulham respectively.

Risk tips

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.

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