On March 4, the Shenzhen Stock Exchange and the Shanghai Stock Exchange issued an announcement to transfer China Chunlai (1969.HK) to the Hong Kong Stock Exchange list under the Shenzhen-Hong Kong Stock Connect and the Hong Kong Stock Exchange list under the Shanghai-Hong Kong Stock Connect, respectively, with effect from now on.
After becoming the target of the Hong Kong Stock Connect transaction, it means that the company will have the opportunity to receive a large amount of attention from southbound capital, which will help the company attract more diverse investors and enhance stock liquidity and popularity in the capital market.
Prior to that, on August 31, 2023, the company was also successively included in the China Education Index and the MSCI China Small Cap Index.
Due to the continued recognition of capital, the stock price has reached a record high on the basis of three consecutive years of rising. Currently, the stock price has returned to the stock price level before inclusion in the market. Looking forward to the future market. With the inclusion of Hong Kong Stock Connect, the company's stock price is expected to recover.
As a private higher education enterprise founded in November 2017 and listed on the main board of the Hong Kong Stock Exchange in September 2018, the company's historical best stock price is 2 compared to the issue price. HK$08 reached 2. A six-fold increase. From 2021 to 2023, the Hang Seng Composite Index fell unilaterally, but the company's performance in the capital market bucked the trend.
The reason behind the increase in stock prices is all about strength.
Over the past five years, the compound annual growth rate of China's Chunlai revenue reached 25. 15%. At the same time, the company's adjusted net profit compound annual growth rate reached 41. 41% At the same time, along with the continuous improvement of the company's operating efficiency, the company's net profit margin also increased from 24 in 2018. 17% surged to 44 in 2023. 05%
The most critical driver of this strong growth momentum is due to the company's refined expansion, emphasis on risk management, and synergy.
As a private higher education leader in central China, the company's main business activities are operated by its wholly-owned colleges and non-wholly-owned independent institutions to provide students with various types of higher education courses, from vocational education to junior college and undergraduate education. Its main source of revenue is tuition and accommodation fees charged to students. Performance growth is mainly achieved through endogenous construction or expansion of existing campuses, as well as increasing student capacity and fees through epitaxial acquisition of schools.
In recent years, Chunlai schools have expanded from Henan and Hubei to the East China region, and the number of students is growing at an annualized rate of nearly 20% from 4 in FY18. The 520,000 capacity was expanded to 10 in FY23. 320,000. Large-scale capital expansion comparable to revenue levels from FY2018 to FY2020 eventually led to a doubling of revenue from FY2021 to FY2023.
On the cost and expense side, the company's main expenses are operating expenses such as the introduction of teachers and increased financing costs due to loans, but the company still maintains a stable and excellent level of profit, which means that the integration capacity and level of operation are good.
Through listing, the company has also improved its original capital structure, and the debt ratio has been reduced to less than 50% year by year, which means that the pace of the company's expansion is steady, bringing efficiency and manageable risks.
According to brokers' forecasts, in the next two years, considering the gradual release of the performance of Jingzhou University, Hubei Health Vocational College, and the Yuanyang Campus of Anyang University, the number of students enrolled will exceed 120,000. If we add the successful opening of the Nanjing campus of Suzhou Tianping University, the overall number of students enrolled is expected to exceed 130,000. Relying on endogenous growth, the number of students enrolled in the company will reach 160,000 in the next four years. The scale effect will expand further, and growth is more visible in the medium term.
In recent years, vocational education reform policy documents have continued to be issued, and multiple factors have driven improvements in the fundamentals of the education industry. As a leader in vocational higher education in central China, the company's strategy of integrating maternity and education to protect employment, focusing on the cultivation of applied talents, and curriculum design and consideration aimed at employment is also very compatible with the current government's biggest concern about “increasing the employment rate.”
Based on the integration of industry and education to protect employment, the company is also actively laying out a hot AI circuit.
On February 5, 2024, the company announced that it had reached a strategic cooperation with Beijing Gravitational Interconnect Technology Co., Ltd. (hereinafter referred to as “Gravity Internet”) to jointly promote the training of AI marketing talents and the construction of a large-scale platform for career planning and job search for college students.
Gravitational Connect is an innovative technology company focusing on the development and application of AI technology. Its parent company, Gravitational Connect Hong Kong, is a Google AI global strategic partner and Google AI chip Coral dealer. Its AI algorithm store released in 2021 attracted more than 30 AI companies, including Jinshan, NetEase, ByteDance, and Xiangxin Technology, and their AI algorithm solutions. It has won the Best Innovative Technology Project Award for promoting innovation and breakthroughs in artificial intelligence applications.
The AI technology revolution has driven heated competition among related companies around the world. From AI chips and servers to AI applications, the stock price performance of related industry chain companies in the capital market is also strong. With regard to the layout in the AI field, the company is also seizing the opportunity.
Through cooperation, big models are introduced to help the company develop and implement AI talent training courses in e-commerce and marketing, increasing practical opportunities for students in the field of AI applications. The construction of a large model platform for college student career planning and job search also empowers the company in terms of job market research and increasing employment rates. The society will also receive employment for more applied talents, and achieve a win-win situation for “students - company - society”.
Based on the replication of past successful experiences, the company's future growth logic is clearly visible — “Deterministic growth in the number of students, continued maintenance of the company's good teaching quality and operating standards”, the gradual recovery of market sentiment in the capital market, the inclusion of Hong Kong Stock Connect, and the layout of AI technology have all opened up multiple growth spaces for the company.