, which is as famous as Lanxiang Technical School , is about to be launched.
On December 6, 2018, China Oriental Education Holdings (the parent company of New Oriental Cooking School) submitted an application for listing to the Hong Kong Stock Exchange.
Although it is often ridiculed for "brainwashing" advertisements, vocational education schools like New Oriental Cooking School and Lanxiang actually have an irreplaceable role in a large population country like China that has rapidly urbanized in the past few decades.
On May 3, 2018, the State Council issued the "Opinions on Implementing the Lifelong Vocational Skills Training System". The article points out that vocational skills training is a fundamental measure to improve workers' employment and entrepreneurship capabilities, alleviate the structural contradictions in the shortage of skilled talents, and improve the quality of employment. It is of great significance to improve total factor productivity and promote the economy to the middle and high-end.
It can be seen from this that vocational skills training plays an important role not only in job seekers, but also in the economic development of enterprises and the entire country.
From the hearing data set, we can get a glimpse of the opportunities and challenges facing the company and the entire industry.
's annual revenue exceeds 2.8 billion: Cooking schools are big business
According to Frost & Sullivan's report, according to the average number of trainees in 2017, the company is the largest provider of vocational skills education in China. Among them, the company ranks first in the three fields of cooking technology, information technology and automobile services. As of the end of August 2018, the company's average recommended employment rate in cooking and computer education exceeded 90%, of which the field of automotive education exceeded 95%.
As can be seen from the figure below, the company's revenue increased from 1.828 billion in 2015 to 2.85 billion in 2017, and the total profit during the period increased from 335 million to 642 million, with an annual compound growth rate of 24.86% and 38.43% respectively. However, the company's growth rate as of the end of August this year has declined, with revenue increasing by 14.80% year-on-year, and net profit declined year-on-year.
The company's gross profit margin is relatively stable, maintaining around 55% in the past three years, but it fell to 51.8% in the first eight months of this year, which is related to the increase in spending due to the large number of new schools this year. Compared with gross profit margin, the company's net profit margin fluctuated more significantly, with 19.3%, 25.1% and 23.2% in the first three years, respectively, while the decline in the first eight months of this year to 14.5%. This is mainly due to the company's increase in sales and administrative expenses, which led to the proportion of the two's revenue rising from 28.7% in the same period last year to 33.8% this year.
As of the end of August 2018, the company has operated 139 training schools in 29 provincial administrative regions in the mainland and Hong Kong, including 50 New Oriental Cooking Schools, 19 Omic Western Cuisine Education, 23 Xinhua Computer Education, 22 Huaxin Zhiyuan DT Talent Training Bases, and 25 Wantong Automobile Education. During this period, the schools trained 70,004 people, 2,633 people, 29,008 people, 1,229 people and 18,684 people respectively.
In addition to these five major training schools, the company also has 25 vocational secondary education schools and 17 private customized cooking experience centers.
From the perspective of specific income composition, the income of New Oriental Cooking School is stable, maintaining around 60%, while the revenue share of Xinhua Computer and Wantong Auto Education is declining year by year. Correspondingly, Omician Western Food Education occupies the decline of the latter two. The company's revenue constitutes a changing trend. We can see that the company's competitive advantage in the catering field is more obvious and its revenue growth rate is stronger.
Judging from the proportion of the following company courses, the long-term courses are stable at about 90%, indicating that the company's main customers are middle school and high school graduates aged 15 to 21.
From the perspective of the company's faculty, as of the end of August 2018, the company had 4,261 full-time teachers and lecturers, with a teacher turnover rate of 14% and a downward trend.
0 billion industry scale, relatively scattered market
The following two figures explain the long-term logic supporting the development of my country's vocational education industry. Figure 1 "Analysis of China's Talent Demand and Supply" shows that with the domestic economic growth and structural transformation, there is a certain gap in the supply of talents, and this gap can be partially met through vocational training.Figure 2 "China's working-age population" shows that with the aging process in China, the labor force population will further decrease, which requires improving the vocational skills of the working population to improve labor productivity.
According to Frost & Sullivan's report, the market size of the vocational skills education in domestic vocational education in 2017 was RMB 95 billion, and it is expected that it will still maintain a growth rate of 10.5% from 2017 to 2022. Cooking technology, information technology and automobile services account for 40.1%, reaching 4 billion, 33.2 billion and 2.1 billion respectively.
According to the average annual training number, the company's market share in domestic vocational skills education in 2017 was 1.7%, of which the market share of cooking, information technology and automobile services was 23.1%, 3.4% and 9.7% respectively. It can be seen that in addition to the cooking industry, although the company has the largest market share in information technology and automobile services, its proportion is not high.
Policy is the biggest uncertainty
As a company in the field of education, the biggest risk faced by a company is policy uncertainty.
With the new version of the "Private Education Promotion Law" coming into effect in September 2017, the company's schools need to obtain a private school operating license before operation, but as of now, the company still has 30 schools that have not obtained corresponding licenses, which will bring certain risks to the company's operations. Regarding this situation, the company explained that this was because the new law lacked local implementation rules, which led to the local Ministry of Human Resources and Social Security not issuing a school license.
In August 2018, the Ministry of Justice issued the Ministry of Justice’s "Draft for Soliciting Opinions" in accordance with the Ministry of Education's "Regulations on the Implementation of the Law on the Promotion of Private Education of the People's Republic of China (Revised Draft) (Draft for Review)". The document stipulates that non-profit private schools should conduct any related transactions in an open, fair and fair form, and establish a disclosure system for such transactions.
Among the company's 139 schools, only 20 currently have chosen to register as profitable schools. Therefore, the structural contract established by the company's figure below may be regarded as a transaction of related parties and a corresponding disclosure system is required, resulting in a large compliance cost.
In addition, the company has 28 schools that cooperate with higher education institutions to provide correspondence education services to students, and these higher education institutions have not registered with the local education section before starting the service. This may be publicly criticized by relevant departments, compulsory rectification within a time limit, and suspension of such educational services.
In addition to the compliance risks of policies, as a vocational training school, injuries to students, employees or other personnel on campus may harm the company's reputation. According to the company's hearing data collection, a student fell from a dormitory building and committed suicide in 2015. The company not only had to bear 30% of the fault, but also faced the risk of reputation loss.
Return to the previous analysis of the expansion of the domestic talent gap, and combined with the economic background of national transformation and upgrading, there is a stable and continuous industry demand for vocational skills training.
However, whether the company can maintain its advantages in brand, scale, and operations, and seize it in time when new industry opportunities arise, it still needs to be observed.
This article is from Bread Finance
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