20180719-申万宏源研究_香港_-天立教育-01773.HK-Rapid_expansion_11页_946kb

Tianli Education International Holdings Limited Summary

Core Content

Tianli Education International Holdings Limited (01773.HK) is a leading private education services provider in western China, primarily offering K-12 educational services and supplementary tutoring and early childhood education. The company has a strong reputation and has been expanding its school network to increase market share and profitability.

Key Information

• Company Overview: Tianli is a private education provider in western China, with a focus on K-12 education. It operates across multiple cities and offers a range of educational programs from kindergarten to grade 12.
• Market Position: As of the end of the 2017 fall semester, Tianli had an enrolment of approximately 20,924 students. According to Frost & Sullivan, it is the second-largest private K-12 school operator in western China.
• Financial Performance:
  • Revenue: Rmb468m in FY17, showing a steady increase from Rmb218.04m in FY15.
  • Net Profit: Rmb136m in FY17, with net margin at 29%, up from 8.1% in FY15.
  • Growth Drivers: The company's growth is driven by both increased enrolment and rising tuition and boarding fees.
• Geographic Expansion:
  • Tianli plans to open eight more schools in Sichuan, Shandong, and Hunan provinces, increasing its capacity by approximately 30,000 students or 109%.
  • The company has already expanded to 13 K-12 schools, 11 tutorial centers, and 4 early childhood education centers across eight cities.
• Teaching Quality:
  • Tianli maintains a strict teacher selection process, with 1,419 out of 1,560 teachers holding a bachelor's degree or higher as of the end of the 2017 fall semester.
  • The average teacher-to-student ratio is maintained at 13-14 to ensure quality education.
• Student Retention:
  • Tianli has a strong student pipeline, with a high percentage of graduates continuing to the next level within the company's system.
  • Retention rates for elementary school graduates to middle school were approximately 71%, 75%, and 82% for the 2015/2016, 2016/2017, and 2017/2018 school years respectively.
  • Kindergarten graduates had retention rates of 69%, 59%, and 42%, while middle school graduates had retention rates of 37%, 42%, and 41% respectively.

Main Points

• Profitability Growth: Tianli's profitability has increased significantly, with gross margin rising from 26.7% in 2015 to 42.3% in 2017, and net margin increasing from 8.1% to 28.4%.
• Reputation and Quality: The company's strong reputation has allowed it to raise prices and improve margins. Its high school students have performed exceptionally well in national exams, with 95.6% of students admitted to universities and 71.6% to first-tier universities in 2017.
• Expansion Strategy: Tianli plans to expand to new geographic locations, including Sichuan, Shandong, and Hunan, with a focus on second and third-tier cities. This strategy is aimed at tapping into the growing demand for quality education.
• Investment Rating: The report provides investment ratings for the company and its industry, with a relative rating system based on expected share price performance compared to the market benchmark.

Key Figures

Investment Considerations

• The report emphasizes that the investment ratings are based on relative performance and should not be the sole basis for investment decisions.
• The company's financial data and market position are analyzed to provide insights into its growth potential and market standing.
• There is a disclaimer stating that the report is for professional investors and that it is not suitable for all investors.

Conclusion

Tianli Education International Holdings Limited has demonstrated strong growth in both revenue and profitability, driven by its expansion strategy and reputation for quality education. The company's focus on maintaining a high teacher-to-student ratio and student retention has contributed to its success. With plans to expand further, Tianli is positioned to continue its growth in the K-12 education sector in China.