Recently, China New Higher Education Group Co., Ltd.(02001.hk) released its full-year results for the 2024 fiscal year. The market discussions were lively and the stock price fluctuated greatly. Xiaobian participated in the post-performance road show of the company and paid deep attention to the company's management's response to key discussion topics.

In response to the most-discussed issue of suspending cash dividends and replacing stock dividends, Xiao Bian learned that New Higher Education chose stock dividends this time to increase investment in high-quality development and seek a future layout based on the improvement of the level of running schools. It is understood that the new higher education has started preparations for the qualification assessment of undergraduate running in Gansu schools and Central China schools in advance; Yunnan schools have been approved for provincial-level project approval and construction of new master's degree awarding units; Northeast schools are also steadily advancing the application for provincial-level project approval and construction of new master's degree awarding units; Guizhou schools are making good progress in applying for undergraduate vocational universities and are officially included in Guizhou Province's "14th Five-Year Plan" vocational and technical university construction plan; In order to seize the opportunity to apply for university scholarships, which only occurs once in five years, Luoyang Schools and Guangxi Schools are preparing in advance to apply for admission to local provinces for the "15th Five-Year Plan" college application plan. From this point of view, the new higher education has concentrated on arranging 6 schools to start improving the level of running schools, of which 2 are preparing for teaching evaluation, 2 are striving for master's points, and 2 are preparing to apply for undergraduate courses. For colleges and universities, these are all "big moves" in running schools, and it is uncertain whether the goals can be absolutely achieved. However, in the face of the current opportunity to improve the level of running schools, the new higher education has chosen to increase investment in advance, plan and batch deployment to promote the level improvement of its universities, deal with uncertain risks with firm high-quality development, adhere to long-term doctrine, be a long-distance runner on the higher vocational education track, and pursue long-term benefits and sustainable development.

In the past three years, New Higher Education Group's operating performance has achieved steady growth, with a compound revenue growth rate of more than 15%, and its high-quality development strategy has achieved considerable results. In fiscal year 2024, the total number of students in school will be reduced by 700 due to the optimization and adjustment of the student source structure, and income will increase by 12.2%. For four consecutive years, the implementation rate of final graduates of the new higher education has exceeded 95%. As of August 31, 2024, the implementation rate of the first destination of graduates of the class of 2024 has reached 95.09%, and the proportion of high-quality employment has reached 33.21%, both reaching record highs. However, due to multiple factors such as changes in the overall economic situation and the continued rise in the number of college graduates,"difficulty in finding employment" will be a challenge faced by various universities in the future. If New Higher Education continues to maintain stable employment performance, it is expected to be very beneficial to the brand building of its colleges.

The management of New Higher Education Group also conveyed confidence in the company's future development during the post-meeting roadshow, believing that the company's continued increase in investment and high quality and good prices in the past few years have supported steady performance growth. In fiscal year 2024, the company's total funds reached 2.32 billion yuan, an increase of 1.17 billion yuan compared with the same period last year, or an increase of 101%, which can fully guarantee its next investments. On the debt side, the net debt ratio has dropped significantly from 44.4% to 28.8%, the interest coverage multiple has increased significantly from 8.77 times to 10.57 times, and the US$80 million syndicated loan due in June 2024 has also been successfully extended to 2027. The financial situation is stable and improving, and the liquidity risk is extremely low.

The management of New Higher Education Group said that in the face of challenges brought by future trends such as a declining social population and increasing demand for higher academic education, the company has advanced the peak period of investment in running schools in order to make adequate preparations as early as possible and occupy the initiative of future competition. Position, actively respond to upcoming industry changes, and minimize potential risks. We believe that with the steady improvement of the school level and the continuous expansion of influence of the eight colleges and universities, it will effectively support the company's medium and long-term healthy development and effectively guarantee the steady long-term returns of shareholders.

Based on performance estimates, the current dynamic dividend yield of New Higher Education Group exceeds 25%, which is very attractive. Considering the company's stable endogenous growth, improvement in school level and continued high-quality employment performance in the future, if cash dividends resume in the future, the valuation will be very attractive or the best time to buy.