It is difficult to enter the park and expensive to enter the park, which has become a problem faced by many young children. Judging from the news reports in recent years, in order to qualify for a nearby admission, it seems that the queues of parents for several days and nights have become the norm. And there is a company that does LED packaging, trying to solve such problems.
Recently, Shenzhen Changfang Group Co., Ltd. (hereinafter referred to as “Changfang Groupâ€) issued the “Announcement on the Company's Participation in the Establishment of an Investment Industry M&A Fund to Sign an Investment Framework Agreementâ€. According to the contents of the "Announcement", the Zhuhai Hengqin Changyide Education Industry Investment M&A Fund (Limited Partnership) under the Changfang Group intends to invest in Shell Jinbao Education Technology (Beijing) Co., Ltd. (hereinafter referred to as "shells" by means of equity transfer and capital increase. Jinbao"), eventually obtained a 51% stake in Shell Jinbao, with a turnover of RMB 120 million.
Shell Jinbao promised that in the three fiscal years of 2017, 2018 and 2019, the audited net profit attributable to the parent company after deducting non-recurring gains and losses shall not be less than RMB 10 million, 2 respectively. 10 million yuan, 36 million yuan. At the same time, it is promised that within three years from the date of delivery, there will be no less than 30 directly-owned kindergartens wholly owned or controlled by Shell Jinbao.
Regarding this investment, the Changfang Group stated that this is one of the actions to further promote the Group's education direct marketing strategy after the new strategic cooperation with the company. In particular, it lays a solid foundation for the market pricing, business layout and operation expansion of the Group's high-end direct kindergartens in China's first-line and key cities.
Why is the Changfang Group so optimistic about high-end direct kindergartens? What is the current status and market space of the early childhood education industry in China?
Invest in two early childhood education institutions within one week
In addition to Beacon Jinbao, the Changfang Group also invested in another early childhood education institution on November 23.
According to the announcement issued by the Changfang Group recently, the company intends to acquire a 60% stake in Shenzhen Terei New Education Group Co., Ltd. (hereinafter referred to as “Teley Newâ€) through the transfer of equity and capital increase.
It is reported that the estimated value of the new 100% equity of Terex held by all the new shareholders of Terai is based on RMB 800,000, and the Changfang Group intends to pass the transfer of equity of RMB 600,000 (40,000). A total of 60% of the company's shares will be acquired in a total of 10,000 yuan and a capital increase (20,000 yuan).
The new company promises that the company's audited consolidated net profit for 2016 will be no less than RMB 25 million. In addition, the net profit attributable to owners of the parent company after the audited non-recurring gains and losses in 2017, 2018 and 2019 were RMB 50 million, RMB 65 million and RMB 84.5 million, respectively. The company also promised that there will be no less than 100 direct-sponsored kindergartens wholly owned or controlled within three years from the date of delivery.
For this investment, the company said that it is to enter the private education field and integrate education assets. The investment in Shell Jinbao is beneficial to the company's layout of high-end direct kindergartens.
As of November 2016, Terai has more than 40 kindergartens across the country, and the number of children in the park is about 9,000. In addition, there are young teachers, education institutes, and early education centers. The company's early childhood education parks are mainly located in first- and second-tier cities, with Guangdong, especially Shenzhen. In addition to the Beijing and Shanghai campuses, Shell Jinbao also has mature or new gardens in Guangzhou and Shenzhen.
It is worth mentioning that according to the performance commitments of the two institutions in the next three years, the Changfang Group will have no less than 130 direct kindergartens.
Why do listed companies transform into early childhood education?
According to the third quarter financial report of the Changfang Group, the company achieved a total operating income of 409,984,045.57 yuan, an increase of 0.47% over the same period of the previous year of 408,077,972.33 yuan; total profit of 31,473,886.90 yuan, compared with 42 in the same period of last year. The net profit of 956,816.74 yuan decreased by 26.73%; the net profit attributable to shareholders of listed companies was 15,634,246.66 yuan, a decrease of 43.69% compared with 27,766,828.91 yuan in the same period of last year.
Changfang Group's third quarter report for 2016
According to the semi-annual report, the company's revenue was 727,486,267.72 yuan, an increase of 19.27% ​​from 609,940,470.86 yuan in the same period of last year; operating profit was 62,460.914.93 yuan, an increase of 30.51 over the same period of the previous year of 47,859,034.61 yuan. %; net profit was 61,656,746.70 yuan, an increase of 33.45% over the same period of the previous year of 46,201,882.90 yuan.
The financial report industry in the first quarter was particularly eye-catching. The company's revenue was 307,346,533.74 yuan, an increase of 100.00% over the same period of the previous year of 153,671,900.10 yuan; the total profit was 27,906,558.87 yuan, compared with the same period of the previous year. 8,027,044.14 yuan increased by 247.66%, and the net profit attributable to shareholders of listed companies was 14,566,947.08 yuan, an increase of 99.11% over the same period of the previous year of 7,316,103.97 yuan.
However, from the performance of the first three quarters, although revenue increased by 11.73% year-on-year, net profit decreased by 15.74% year-on-year. In terms of net cash flow, it decreased by 146.47% year-on-year. Significant changes in performance were mainly affected by the third quarter.
According to the company, this is mainly due to the economic downturn and the rapid advancement of LED lighting to replace traditional lighting. Moreover, since the beginning of this year, the LED industry has undergone fierce competition such as price wars and product homogenization, and the industry has been shuffled drastically. The polarization of enterprises in the industry is obvious. Large enterprises have further expanded through mergers and acquisitions, while small and medium-sized enterprises have survived.
Although the competition is fierce, with the upgrade of energy consumption, the LED industry still has huge market space. In addition to consolidating its competitive position in the packaging market, the company will also extend the industrial chain, accelerate resource integration, and strive to achieve rich business forms and optimization of upstream and downstream industrial chains.
Growing demand for high-end kindergartens
In the end, the Changfang Group chose to cut into the education industry. In June, the company reviewed and approved the “Proposal on Participating in the Establishment of Education Industry Investment M&A Fundsâ€. In addition, in order to promote the company's extended development, the company also plans to invest in the establishment of a wholly-owned subsidiary Shenzhen Qianhai Changfang Education Management Co., Ltd. Recently, the company's board of directors also reviewed and approved the “Proposal on Applying to Change the Land Use of Pingshan Plant to Educational Landâ€.
With the recent two investments, why is the action of the Changfang Group's transition education so fast and firm?
According to the statistics report on the implementation of the "China Children's Development Program (2011-2020)" published by the National Bureau of Statistics, in 2015, there were 224,000 pre-school education schools nationwide, an increase of 49% over 2010. There were 17,000 public kindergartens in the country and 61,000 rural public kindergartens, which increased by 74% and 57% respectively compared with 2010. Public kindergartens account for only 35% of pre-school education schools, which means that public kindergartens are developing slowly, while private kindergartens have huge market space.
At present, private kindergartens can be divided into three categories according to their operating modes: direct-operated, franchised and integrated (direct + franchise). Compared with the three types of models, the teaching, management and quality of the direct-operated park are more controllable, which is conducive to the establishment of brand image, but the operational risks of investment and need to bear greater, and continued expansion requires strong financial support. Obviously, the Changfang Group chose a more controllable direct mode, and it is more optimistic about the high-end market.
Private kindergarten classification, characteristics
The Changfang Group believes that the current preschool education market is in a state of “small and weakâ€, and next year may welcome the industry's integration year, which will increase the demand for high-end kindergartens. Based on this development, the company chose to cut into this field.
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