Summary of Conference Call Company and Industry - The conference call pertains to the higher education sector, specifically focusing on a group of schools operated by the company, which provides educational services and has a significant presence in the local market. Key Points and Arguments 1. **Increase in Value-Added Services**: The company is expanding the range of value-added services provided to schools, which is expected to increase profits and consequently the tax impact will also rise. The company maintains a high dividend payout ratio of 40% and plans to sustain this level in the future [1][12][22]. 2. **Revenue Growth**: Since its listing, the company has experienced a consistent revenue growth rate of 30%. The higher education sector is projected to continue growing until 2034, which will benefit the company’s core business [2][8]. 3. **Revenue Sources**: Currently, 87% of the company's revenue comes from local growth in the higher education sector, contributing 91% to the profit. The contribution from vocational education is minimal at 7%, and overseas schools contribute only 2% [2]. 4. **Impairment Losses**: The company has recognized impairment losses on certain schools due to discrepancies between acquisition valuations and current operational performance. For instance, a school in Sichuan triggered a 1.04 billion RMB impairment despite showing a 30% increase in student enrollment since acquisition [3][4]. 5. **Tuition Fee Growth**: The Sichuan school’s tuition fee growth has been limited to 6% due to government regulations, which is significantly lower than the expected increase of 20% to 50%. This has impacted the revenue expectations from this institution [15][16]. 6. **Future Enrollment Trends**: The company anticipates a decline in enrollment for certain vocational schools due to competition from high schools. This has led to further impairment losses being recognized [5][6]. 7. **Capital Expenditures**: The company’s capital expenditures reached a peak of 4.8 billion RMB, which is aimed at future growth and maintaining competitive advantages. A decline in capital expenditures is expected in the coming years, which may positively impact the dividend payout [7][20]. 8. **Tax Rate and Profitability**: The effective tax rate is projected to increase as the company expands its service offerings. The current tax rate is estimated to be around 10% to 15%, depending on tax refunds [21][22]. 9. **Debt Structure**: The company’s debt structure is stable, with a significant portion of its debt in RMB at low-interest rates. The impact of fluctuating interest rates on the overall debt service is minimal [27]. 10. **Future Profit Expectations**: The company expects 11% revenue growth for the current year, with a potential dip in profits in fiscal year 2025 due to rising costs and other factors. However, profits are expected to rebound in subsequent years [25][26]. Other Important but Overlooked Content - The company is actively managing its impairment risks and has strategies in place to mitigate potential declines in student numbers by adjusting tuition fees and reducing recruitment costs [11][19]. - The company has a cautious approach to future tuition fee increases, reflecting a conservative growth outlook in its financial projections [26][32]. - The overall utilization rate of the campuses is currently at 72%, with higher education institutions performing better than vocational schools in terms of enrollment [29][30]. This summary encapsulates the key insights from the conference call, highlighting the company's strategic direction, financial performance, and market outlook.

Financial Performance - For the fiscal year ending August 31, 2024, the company reported revenue of RMB 6,579 million, an increase of 17.1% compared to RMB 5,616 million in the previous year[3]. - The gross profit for the same period was RMB 3,644 million, reflecting a growth of 15.2% from RMB 3,164 million[3]. - Adjusted net profit attributable to the company's owners was RMB 2,242 million, up 7.9% from RMB 2,077 million[3]. - Operating profit increased by 14.2% year-on-year, reaching RMB 2,846 million[19]. - Adjusted net profit rose by 3.3% year-on-year, amounting to RMB 1,971 million[19]. - Adjusted EBITDA grew by 12.3% year-on-year, totaling RMB 3,774 million[19]. - The company recorded a net loss of RMB 1,975 million in other income and losses, primarily due to impairment losses on goodwill and intangible assets amounting to RMB 1,911 million[45]. - Main operating costs increased from RMB 2,452 million for the year ending August 31, 2023, to RMB 2,935 million for the year ending August 31, 2024, reflecting a rise of 19.7% due to increased student numbers[38]. - Administrative expenses rose to RMB 965 million for the year ending August 31, 2024, compared to RMB 775 million for the year ending August 31, 2023, driven by increased student enrollment and new campus investments[43]. - The company reported a net profit of RMB 502 million for the year, a decrease of 67.4% from RMB 1,541 million in the previous year[113]. - The company's income tax expense for the year ended August 31, 2024, was RMB 170 million, compared to RMB 93 million for the previous year, representing an increase of 83%[162]. - Total comprehensive income attributable to the company's owners for the year ended August 31, 2024, was RMB 421 million, a decrease from RMB 1,380 million in 2023, representing a decline of 69.5%[115]. - Basic earnings per share for the year ended August 31, 2024, was RMB 16.13, down from RMB 55.31 in 2023, reflecting a decrease of 70.8%[115]. Student Enrollment and Capacity - The total number of full-time students reached approximately 270,000, representing a year-on-year growth of about 9%[7]. - The number of higher education students increased by approximately 12.5% to 224,000[7]. - The company expanded its student capacity by nearly 40,000 through new and expanded campuses, increasing the number of campuses from 22 to 23[12]. - The number of cooperative schools increased to 3,980, contributing approximately 75,000 skilled graduates to society[15]. - The number of international education programs with verified qualifications increased to 7, with new student enrollment in international courses growing over 100% year-on-year[16]. - The group established 13 new industry colleges, bringing the total to 61, including notable institutions like Huawei ICT College[15]. Cash and Reserves - The cash reserves as of August 31, 2024, were recorded at RMB 6,626 million[3]. - Cash reserves increased to RMB 6,626 million as of August 31, 2024, up from RMB 5,802 million in 2023[60]. - The company reported cash and cash equivalents of RMB 6,238 million as of August 31, 2024, an increase from RMB 5,177 million in 2023, representing a growth of 20.5%[117]. Dividends and Shareholder Information - The board recommended a final dividend of RMB 0.1028 per share[3]. - The proposed final dividend is RMB 0.1028 per ordinary share, compared to RMB 0.1353 per share for the year ended August 31, 2023, reflecting a decrease of approximately 24.5%[90]. - The total dividend payout for the year is expected to be approximately 40% of the adjusted net profit attributable to the owners of the company[90]. - The company plans to offer shareholders the option to receive the final dividend in new shares instead of cash, pending approval at the upcoming annual general meeting[92]. - The annual general meeting is scheduled for January 21, 2025, with a suspension of share transfer registration from January 16 to January 21, 2025[93]. Market Performance and Strategy - Domestic market revenue increased from RMB 5,396 million for the year ending August 31, 2023, to RMB 6,335 million for the year ending August 31, 2024, representing a growth of 17.4% driven by an increase in student enrollment and average revenue per student[36]. - International market revenue rose to RMB 244 million for the year ending August 31, 2024, up 10.9% from RMB 220 million for the year ending August 31, 2023[37]. - The company anticipates a decline in new customer numbers due to increased market competition and changing customer preferences[51]. - The company is focused on enhancing vocational education capabilities through various initiatives, including building practical training centers and expanding international cooperation[70]. - The company is exploring strategic acquisitions to enhance market presence, targeting companies with a combined revenue of $200 million[7]. Corporate Governance and Compliance - The audit committee reviewed the financial performance for the year ended August 31, 2024, ensuring the integrity and accuracy of financial data[109]. - The company is committed to enhancing corporate governance practices to align with legal and professional standards[105]. - The company maintained compliance with public float requirements as per listing rules[101]. Employee Information - The company had 18,677 employees as of August 31, 2024, representing a 13% increase from 16,468 employees as of August 31, 2023[84]. - The company will provide various benefits to employees, including participation in social insurance plans and diverse welfare options[84]. - The company is committed to hiring based on qualifications and experience, ensuring equal employment opportunities without discrimination[87]. Future Outlook - Future plans include deepening industry-education integration and innovating international education models to cultivate skilled talent[20]. - The company anticipates sufficient resources to continue operations for at least the next twelve months, despite current liabilities exceeding current assets[130].

Investment Rating - The report maintains an "Accumulate" rating for the company [2][4]. Core Views - The company is expected to achieve a revenue of approximately 6.469 billion RMB in the fiscal year 2024, with a downward adjustment for the fiscal years 2025 and 2026 to 7.188 billion RMB and 7.967 billion RMB respectively [4]. - The adjusted net profit for fiscal year 2024 is projected to be around 2.105 billion RMB, with slight downward adjustments for the following years [4]. - The report highlights that the company has experienced a significant decline in net profit expectations for fiscal year 2024, primarily due to anticipated decreases in tuition fees and potential policy changes affecting international students in Australia [4]. Financial Summary - Revenue growth rates are projected to be 37.00% for 2020, 37.50% for 2021, 29.15% for 2022, and gradually decreasing to 10.83% by 2026 [1]. - The adjusted net profit growth rates are expected to be 28.73% for 2020, 57.13% for 2021, and tapering to 8.95% by 2026 [1]. - The price-to-earnings (PE) ratio is forecasted to decrease from 27.47 in 2020 to 4.77 by 2026, indicating a potential increase in valuation attractiveness over time [1].

Financial Performance - The main revenue for the six months ended February 29, 2024, was RMB 3,284 million, an increase of 18.3% from RMB 2,775 million for the same period in 2023[17]. - Gross profit for the same period was RMB 1,839 million, representing a gross margin of 56.0%, compared to RMB 1,593 million and a gross margin of 57.4% in 2023[17]. - Net profit attributable to the owners of the company increased to RMB 1,071 million, up 9.6% from RMB 977 million in the previous year[21]. - Adjusted net profit for the six months ended February 29, 2024, was RMB 1,092 million, compared to RMB 1,045 million in 2023, reflecting a growth of 4.5%[24]. - Operating profit for the period was RMB 1,475 million, an increase of 17.4% from RMB 1,257 million in the prior year[17]. - The adjusted EBITDA for the six months ended February 29, 2024, was RMB 1,956 million, up 16.7% from RMB 1,676 million for the same period in 2023[30]. - The net profit for the six months ended February 29, 2024, increased by 14.7% to RMB 1,188 million, compared to RMB 1,036 million for the same period in 2023[30]. - The gross profit for the six months ended February 29, 2024, was RMB 1,839 million, reflecting a growth of 15.4% from RMB 1,593 million for the same period in 2023[27]. - Profit before tax increased to RMB 1,283 million, representing a growth of 19.98% compared to RMB 1,069 million in the previous year[93]. - The total comprehensive income for the period was RMB 1,069 million, compared to RMB 976 million in the same period last year, reflecting a 9.5% increase[101]. Revenue Segmentation - The domestic market segment's revenue increased from RMB 2,668 million to RMB 3,179 million, representing a growth of 19.2%[27]. - The international market segment's revenue decreased to RMB 105 million, down from RMB 107 million for the same period in 2023[27]. - Domestic market revenue reached RMB 3,179 million, while international market revenue was RMB 105 million for the same period, indicating a strong focus on the domestic market[113]. - The education services revenue recognized over time was RMB 3,263 million, up from RMB 2,753 million in the previous year, marking a growth of approximately 18.4%[117]. Costs and Expenses - The company reported a financing cost of RMB 225 million, which increased from RMB 190 million in the previous year, indicating a rise of 18.4%[17]. - Administrative expenses rose to RMB 476 million from RMB 387 million, reflecting increased operational costs[93]. - The total employee costs increased to RMB 1,020 million, up from RMB 839 million for the same period in 2023, representing a 21.6% increase[127]. - The construction costs for new campuses and student dormitories increased to RMB 1,648 million, compared to RMB 840 million for the same period in 2023, indicating a 96.5% rise[137]. Financial Position - The company's cash reserves as of February 29, 2024, amounted to RMB 4,531 million, a decrease from RMB 5,802 million as of August 31, 2023[30]. - As of February 29, 2024, the company's bank and other borrowings and bonds amounted to RMB 8,933 million, an increase from RMB 8,603 million as of August 31, 2023[33]. - The net equity debt ratio as of February 29, 2024, was 23.0%, up from 15.3% as of August 31, 2023[33]. - The company maintained a prudent treasury policy and a robust liquidity structure as of February 29, 2024[33]. - The company recorded net assets of approximately RMB 19,148 million and cash reserves of approximately RMB 4,531 million as of February 29, 2024[81]. - The company had a net decrease in cash and cash equivalents of RMB 1,129 million, which is an improvement from a decrease of RMB 1,491 million in the previous year[106]. Shareholder Information - The total number of issued shares was 2,551,540,490, with significant shareholdings by directors, including 61.04% held by certain directors and their related entities[55]. - Major shareholder "Blue Sky" holds 772,184,000 shares, representing approximately 30.26% of the total issued shares[62]. - The company declared a mid-term dividend of RMB 0.1877 per share for the period, an increase from RMB 0.1638 per share for the same period in 2023[131]. - The company has a share option plan that may grant options to directors based on the number of shares held prior to the IPO[56]. Corporate Governance and Compliance - The company has complied with all provisions of the corporate governance code as set out in Appendix C1 of the listing rules for the six months ended February 29, 2024[50]. - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited consolidated financial statements for the six months ended February 29, 2024[51]. - The company has no significant contingent liabilities as of February 29, 2024[33]. Employee and Operational Developments - The company had 17,810 employees as of February 29, 2024, representing a 19% increase from 14,925 employees on February 28, 2023, primarily due to organic growth in staff numbers in new schools and districts[43]. - The company provides various benefits and social insurance plans for its employees, ensuring compliance with local labor laws[43]. - The company has implemented a mentorship program to help new teachers integrate into the teaching team more effectively[43]. Investment and Expansion Plans - The company plans to continue expanding its vocational education services across China, Australia, and the UK, focusing on high-quality technical talent development[15]. - The company raised approximately RMB 1,681.4 million from previous placements, with 70% allocated for expanding new campuses in the Greater Bay Area and 30% for potential acquisition projects[36]. - The company is focused on expanding its education business overseas while adhering to the updated foreign investment negative list regulations[75]. Risk Management - The company is monitoring foreign exchange risks and may consider hedging against significant foreign currency risks when necessary[33].

Summary of Conference Call Company Overview - The company has recently reported strong and consistent organic growth, maintaining a robust performance in its sector [1] - The company has also increased its dividend payout ratio, indicating a commitment to returning value to shareholders [1] Key Points - The management, represented by Mr. Mo, will provide updates on the company's current status and performance [1] - Following the update, a Q&A session will be held to address any inquiries from participants [1] Additional Important Information - The focus on organic growth suggests a strategic emphasis on internal development rather than relying on acquisitions [1] - The increase in dividend payout may attract more investors looking for income-generating stocks [1]

Investment Rating - The investment rating for the company is "Hold" with a target price of 5.08 HKD, maintaining the current rating [1]. Core Views - The company reported a revenue increase of 18.3% year-on-year for FY24H1, reaching 3.28 billion HKD, while the adjusted net profit attributable to shareholders grew by 4.5% to 1.09 billion HKD. The dividend payout ratio was 45%, an increase from 40% in the same period last year [1]. - The domestic market revenue was 3.18 billion HKD, up 19.2%, driven by an increase in student numbers and per-student income. However, international market revenue decreased by 1.9% to 105 million HKD [1]. - The company is increasing its investment in education, expanding existing campuses, and has a gross profit margin of 56%, which is a decrease of 1.4 percentage points year-on-year [1]. - The adjusted net profit margin for FY24H1 was 33.3%, down 4.4 percentage points year-on-year. Capital expenditures rose by 66.6% to 2.03 billion HKD, primarily for campus expansion [1]. - The company has adjusted its revenue forecasts for FY24-25 to 6.6 billion and 7.5 billion HKD, respectively, with adjusted net profits of 2.15 billion and 2.42 billion HKD, reflecting an increase in student enrollment expectations [1]. Summary by Sections Financial Performance - FY24H1 revenue was 3.28 billion HKD, up 18.3% year-on-year; adjusted net profit was 1.09 billion HKD, up 4.5% [1]. - The dividend per share was 0.1877 RMB, with a payout ratio of 45% [1]. Market Segmentation - Domestic market revenue was 3.18 billion HKD, up 19.2%; international market revenue was 105 million HKD, down 1.9% [1]. Cost Structure - Gross profit margin was 56%, down 1.4 percentage points; selling expenses accounted for 2.7% of revenue, down 0.4 percentage points; administrative expenses accounted for 14.5%, up 0.5 percentage points [1]. Capital Expenditure - Capital expenditures were 2.03 billion HKD, up 66.6%, mainly for campus expansion [1]. Future Outlook - Revenue forecasts for FY24-25 are adjusted to 6.6 billion and 7.5 billion HKD, with adjusted net profits of 2.15 billion and 2.42 billion HKD [1].

Summary of the Conference Call Company and Industry - The conference call involved **Western Media** and its discussion on **Religious Holdings** performance [1] Core Points and Arguments - **Performance Overview**: Religious Holdings reported a continuous growth in profits for the first half of the fiscal year 2024, which was released before the holiday at the end of April [1] - **Dividend Distribution**: The company announced a **45% dividend payout ratio** to reward shareholders, indicating strong financial health and commitment to returning value to investors [1] Other Important Content - The call was hosted by analysts from Western Media, highlighting the collaborative effort in analyzing the performance of Religious Holdings [1]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 6.85 [6][9]. Core Insights - The company achieved a revenue of RMB 3.28 billion in the first half of FY2024, representing an 18.3% year-on-year increase, driven by a 9% rise in average tuition fees and a 9% increase in student enrollment [2]. - The net profit for the same period was RMB 1.07 billion, a 9.6% increase year-on-year, with an adjusted net profit of RMB 1.09 billion [2]. - The company plans to invest RMB 50 billion from 2023 to 2025 for campus expansion, aiming to increase the capacity of various institutions significantly [3]. - The company is also focusing on enhancing the proportion of international courses, which have an average tuition fee approximately 60% higher than regular courses [3]. - The forecast for FY2024 net profit is adjusted to RMB 1.99 billion, reflecting a 43.8% year-on-year growth [4]. Financial Summary - For FY2024, the company expects revenues to reach RMB 6.54 billion, with a growth rate of 16.4% [5]. - The gross profit margin is projected to decline to 55.1%, down 0.9 percentage points from previous estimates [4]. - The company has increased its dividend payout ratio to 45%, exceeding market expectations, with a current dividend yield of approximately 9% to 10% [4][5]. - The company holds approximately RMB 4.5 billion in cash, indicating a strong liquidity position to support future capital expenditures [4].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company demonstrates strong organic growth with a revenue increase of 18.3% year-on-year in FY2024H1, achieving a total revenue of 3.284 billion RMB [3] - The domestic market shows robust growth, with a 19.2% year-on-year increase in main revenue from the domestic segment [3] - The overall gross margin slightly declined to 56%, down 1.41 percentage points year-on-year, primarily due to increased student numbers and educational investments [3] - The company is a leading player in the domestic higher education sector, showcasing strong acquisition integration and management capabilities [3] - Significant capital investment is being made in new campus construction, expected to increase student capacity by 52,000 [3] Financial Summary - Revenue projections for FY2024E are set at 6.501 billion RMB, with a year-on-year growth rate of 11.24% [2] - Adjusted net profit for FY2024E is forecasted at 2.101 billion RMB, reflecting a substantial year-on-year increase of 52.22% [2] - The latest closing price corresponds to a P/E ratio of 4.89 for FY2024E [4] - The company plans to distribute an interim dividend of 0.1877 RMB per share, representing approximately 45% of the adjusted net profit [3]

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company's performance is in line with expectations, with a projected revenue of 6.47 billion, 7.43 billion, and 8.52 billion for the fiscal years 2024-2026, and net profit of 2.11 billion, 2.32 billion, and 2.55 billion respectively [4] - The target price is set at 8.98 HKD, based on a 10x PE valuation for the fiscal year 2024 [4] Financial Performance Summary - For the first half of the fiscal year 2023/24, the company achieved a revenue of 3.28 billion, representing a year-on-year increase of 18.3%, with a gross profit of 1.84 billion, up 15.4% year-on-year [4] - Adjusted net profit for the same period was 1.22 billion, reflecting a year-on-year growth of 10.2% [4] - The gross margin decreased by 1.41 percentage points to 56.00%, while the sales expense ratio decreased by 0.43 percentage points to 2.71% [4] Growth Drivers - The company is experiencing steady organic growth, driven by an increase in both student numbers and per-student revenue, with a 9% increase in student enrollment and a 9% rise in revenue per student [4] - The domestic market segment generated revenue of 3.18 billion, a year-on-year increase of 19.2%, while the international market segment saw a slight decline [4] - The company has a strong cash reserve of 4.53 billion, which supports its expansion plans [4]