21st Century Business Herald reporter Wang Feng reported Chuanzhi Education (SZ:003032) recently released its 2022 semi-annual financial report.
During the reporting period, the revenue of Chuanzhi Education was 388 million yuan, a year-on-year increase of 27.85%; the net profit attributable to shareholders of the listed company was 87.5097 million yuan, a year-on-year increase of 234.94%.
After 2020, the performance of Chuanzhi Education, which focuses on offline training, has fluctuated and is now getting back on track. After turning losses in the first half of 2021, net profit in the first half of this year doubled again.
From 2016 to 2019, Chuanzhi Education maintained a steady growth of more than 10% for 4 consecutive years, but suffered a negative growth of more than 30% in 2020, and only recovered to a growth of 3.79% in 2021.
After the “double reduction”, more and more education companies have transformed to the IT vocational education track. Chuanzhi Education needs to seize the “window” of the industry and use a unique business model to repair the growth curve.
Multiple business models
Chuanzhi Education is an IT vocational education company. It will be listed on the Shenzhen Stock Exchange in January 2021. It is also the first A-share IPO education company.
The operating income of Chuanzhi Education mainly comes from the short-term training business of digital talents, including on-site training under the brand of “Dark Horse Programmer” and online training under the brand of “Boxue Valley”.
The training period of on-site training of Dark Horse programmers is 4-6 months. The training period of online training in Boxuegu is usually set to a learning service period of no more than 1 year according to different product types, which is completed by students online.
As of the end of April, Chuanzhi Education has set up 20 teaching centers in 19 cities across the country, mainly located in first- and second-tier cities. In the future, it will build and expand teaching centers according to business development needs.
In the first half of this year, the offline and online short-term training business revenue was 373 million yuan, a year-on-year increase of 31.06%, accounting for 96.09%. Part of the offline training of Chuanzhi Education has been converted to online live training, and classes have not been suspended. However, students are still more inclined to participate in offline training.
In addition to short-term training business, Chuanzhi Education has also set up Chuanzhi Specialized Training College in Suqian City, Jiangsu Province to carry out non-academic higher education. Skills + Education” business model.
According to the financial report, the business adopts two charging modes: pre-paid and post-paid. The post-paid mode “no tuition fees during school, and no tuition fees if the monthly salary after graduation is less than 8,000 yuan (first-tier cities).”
Chuanzhi College was established in 2017. It has cultivated more than 1,000 graduates and currently has more than 600 students. In the first half of this year, the revenue of non-academic higher education business was 11.99 million yuan.
Chuanzhi Education has previously stated that holding non-academic higher education is the company’s initial attempt in the vocational education track.
In December 2021, Chuanzhi Education held a for-profit full-time private secondary vocational school in Suqian City: Suqian Chuanzhi Internet Secondary Vocational and Technical School.
The goal of Chuanzhi Education may include the establishment of full-time higher vocational colleges. At present, many A-share listed companies or their affiliates have held higher vocational colleges, but some have incorporated their revenue into the listed company system, and some have not.
Seek faster development
The cultivation of talents in the digital economy is ushering in the wind.
Chuanzhi Education said that the increase in revenue in the first half of the year was due to the increase in the willingness of students to sign up, especially the increase in the number of employment classes in Nanjing, Hangzhou, Wuhan and other places, and the increase in income.
In the past two years, the prosperity of the Internet industry has declined, and many companies have laid off employees. However, Chuanzhi Education stated at an investor exchange event in April this year that there is still a large gap in the industry for mid-to-high-end digital talents, especially in the field of hard technology.
According to the financial report, the demand for digital talents in 5G big data centers, artificial intelligence, industrial Internet and other fields will be more urgent, and digital talents will usher in an explosive growth in employment demand.
There are two main types of training courses offered by Chuanzhi Education. One is digital professional talent courses, including artificial intelligence, Python + big data, JavaEE, HTML & JS + front-end, software testing, architects, intelligent robot software development, etc.; the second is digital application. Talent courses, including new media + short video live broadcast operation, product manager, UI/UE + full-link designer.
The iteration speed of IT vocational education courses is very fast, so it requires a large investment in research and development. Chuanzhi Education will invest 74.19 million yuan in research and development in 2020, accounting for 11.6% of its operating income, and will invest 75.25 million yuan in research and development in 2021, accounting for 11.33% of its operating income. This is at a high level among education companies.
However, in the first half of this year, R&D investment was 33.92 million yuan, a year-on-year decrease of 10.1%, accounting for 8.74% of operating income.
In addition, sales expenses in the first half of this year reached 68.74 million yuan, a year-on-year increase of 46.5%, accounting for 17.71% of operating income. The financial report explained that this was because the employee compensation and promotion fees in the current period increased compared with the previous period.
In the investor exchange event in April this year, Chuanzhi Education also stated that most of the company’s customers currently come from word-of-mouth recommendations from old users, so the proportion of sales expenses is relatively small, and the proportion of publicity and promotion expenses to revenue in 2021 will only be 3.6 %, and invest more funds in high-quality team building and curriculum development.
Today, the proportion of sales expenses to revenue has increased significantly, and the space for R&D investment has been squeezed accordingly. Does it mean that Chuanzhi Education needs to seek faster development in the uncertain market environment and fierce competition?
In fact, the revenue of 388 million yuan in the first half of this year, although an increase of nearly 30% year-on-year, has not returned to the level before 2020. Data shows that Chuanzhi Education’s revenue in 2018 and 2019 has reached 791 million yuan and 924 million yuan.
In order to impact the listing, Chuanzhi Education has also launched an online children’s programming business, hoping to catch up on the track. However, the current proportion of children’s programming revenue is very small, and it is only used as a research and development reserve.
In terms of cash flow, the net cash flow from operating activities in the first half of this year was about 175 million yuan, a year-on-year increase of 324.73%.
After the business situation improved, Chuanzhi Education launched a share repurchase in March this year, with a repurchase amount of not less than 30 million yuan and not more than 60 million yuan.
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