China New Higher Education Group Further Acquires 39% Equity Interest of Guangxi School Sponsor
With Advantages of ASEAN Exposure Positive outlook on Higher Education Market
(Hong Kong, July 29, 2020) China New Higher Education Group Limited ("China New Higher Education Group", together with its subsidiaries, collectively the "Group"; stock code: 2001.HK) announces the further acquisition of 39% stakes in Songming Xinju (the sole shareholder of the Guangxi School Sponsor ) for a consideration of RMB152 million. After the completion of further acquisition, Daai Education and Mr. Li Jianchun will hold 90% and 10% shares in Songming Xinju respectively.
With the initial acquisition of 51% equity interest completed in January 2019, the Group will benefit from the further acquisition of Guangxi Schools in several regards:
(1) This acquisition is consistent with the Group’s strategy to persistently enhance its penetration in regional markets with high growth rate. Guangxi Zhuang Autonomous Region currently has relatively lower gross student enrollment rate compared with that of other provinces in the PRC. The Beibu Gulf Economic Zone, in which the Guangxi Schools are located, is a strategic development zone in Guangxi Zhuang Autonomous Region under the “One Belt and One Road” (“一帶一路”) initiative which possesses the regional advantage of covering the countries within the Association of Southeast Asian Nations and is the fastest growing region in Guangxi Zhuang Autonomous Region. Meanwhile, only a few universities are located in this region where the higher education services supply falls short of demand, bringing growth potential for the Guangxi Schools. Also, the GDP growth rates of Guangxi Province were above the national average levels in recent years, bringing higher potential for future increase in tuition fee.
(2) There are only two universities in Qinzhou whereas the Guangxi Schools are the only private university in this region. The Guangxi Schools provide higher vocational education in 37 disciplines and cooperate with various renowned and quality corporations across the nation in respect of internship and employment for students.
(3) The Further Acquisition of Guangxi Schools will enable the Group to give full play to its strength in collectivized school operation and to achieve the Group's high-quality development goals. After the First Acquisition, the operational capability and profitability of such schools have been significantly improved. Upon the completion of the Further Acquisition of Guangxi Schools, it will give full play to the strength in collectivized school operation and the operational efficiency will be further improved.
(4) The valuation of the Further Acquisition of Guangxi Schools is reasonable, in which the costs per student of the Further Acquisition of Guangxi Schools is basically in line with that of the First Acquisition, and the PE ratio of the Further Acquisition of Guangxi Schools is lower than that of the First Acquisition.
Additionally, Guangxi Schools feature high quality internationalized education. Since its incorporation, a lot of students are rewarded with special grants and first prizes in many contests, covering English, Thai, foreign trade, and art design of Nixing pottery; and its graduate employment rate has been accounted for above 95%.
Chairman Mr. Li Xiaoxuan of China New Higher Education said, “The further acquisition of Guangxi Schools demonstrates the Group’s commitment to deepen market penetration into the promising higher education markets. With the further acquisition, we will fully leverage the advantage of our group’s collectivized school operation to enhance the operational management ability of Guangxi Schools and step forward the Group’s long-term business goal. Inheriting our original aspiration, the Group will strive to offer the excellent higher vocational education, maintain our strength of collectivized school operation, and gain broader development potential.”
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About China New Higher Education Group Limited
China New Higher Education Group Limited is a leading private formal higher education group in China with 20 years of education industry experience, specializing in providing higher education which focuses on applied sciences. The Group endeavors to help each student maximize their potential and live their life to the fullest. Since 2009, the Group has been operating schools in different provinces and regions, and its current school network covers 7 provinces in China, including Yunnan, Guizhou, Hubei, Heilongjiang, Henan, Guangxi, and Gansu.
The Group provides high quality higher education in a wide selection of fields in applied sciences. Its courses are designed to equip students with practical and readily applicable skills, helping to prepare them for the job market. As a leader in high-quality employment, the Group won the title of the Top 50 National Employment of the MOE, with an average employment rate of above 97%. The Group became a constituent stock of the Hang Seng Composite Small Cap Index and the Hang Seng Consumer Goods & Services Index in the Hang Seng Composite Index Series in August 2017, and was included as a constituent stock of the MSCI China Small Cap Index in November 2017 and included as a constituent stock of Shenzhen and Hong Kong Stock Connect in March 2018.