The “Private Education Promotion Lawâ€, which was reviewed three times, was passed in November 2016. The core of this revision is “Classification Management of For-profit and Non-profit Education Organizationsâ€. In addition to the private schools in the compulsory education stage, enterprises can choose to set up independently. Non-profit and for-profit.
This means that private education can enter the education industry in a profit-making manner. After the passage of the bill, the education industry with a very low securitization rate is expected to usher in a new round of education listings and mergers and acquisitions, and the speed of education asset securitization will accelerate.
Sun Yibing, director of the Policy Research and Legal System Department of the Ministry of Education, said recently that the implementation of the People's Promotion Law may be introduced in September this year. In January 2017, the Ministry of Education promulgated the “Regulations on the Classification and Registration of Private Schools†and the “Implementation Rules for the Supervision and Management of Profit-making Private Schoolsâ€. Sun Yibing said that existing private schools choose to register as for-profit private schools, and the financial clearing rules are governed by provincial governments. In the formulation, the Ministry of Education also encourages the localities to be introduced before September 1, 2017.
The education market is particularly large, but its securitization rate is extremely low. Prior to this, more than 160,000 private schools of all levels in China were non-profit, and most of the educational assets could not be listed. Hu Min, founder and president of the new channel, said in an interview with the interface journalist: "After the revision of the Private Education Promotion Law, it is obviously good news for the education industry. In 2017, there will be an explosive growth in funds entering the education field, just like the year. The Internet. This is a hot spot, a hot land, and from this year onwards, there will be a large influx of funds."
In the process of securitization of educational assets, mergers and acquisitions have become the main catalyst at this stage. The data shows that the amount of M&A in the education industry in 2015 was 10.9 billion yuan. In 2016, the amount of M&A in the education industry will exceed 20 billion yuan. In 2016, listed companies or New Third Board companies initiated at least 65 educational asset acquisitions, including Li Sichen (300010.SZ) 1.76 billion yuan to acquire Kangbang Technology, 100 years of talent, and study abroad 360; Qinshang Optoelectronics (002638.SZ)20 100 million yuan to acquire Longwen Education; Yinrun Investment (000526.SZ) to acquire 2.3 billion yuan for education. The two major K12 education leaders of Longwen Education and Xueda Education returned to the A-share market by means of mergers and acquisitions.
With the passage of the People's Promotion Law, more and more listed companies are also in the process of in vitro incubation through the establishment of industrial funds. After the successful incubation, the preferential integration into listed companies can provide new profit growth points. Relevant securities analysts told the interface journalists that the asset securitization of education will become a wave, and mergers and acquisitions will still be the mainstream. The field of preschool education and vocational education will become the main M&A point. CITIC Securities said that the most upstream of the education industry chain is an information-based education enterprise concentrated in 2B, and the middle reaches is a relatively concentrated area, which is the field of education and training services. According to estimates, the size of the extracurricular tutoring market in primary and secondary schools is between 400 billion and 600 billion yuan, and the size of the personalized education market is about 120 billion yuan.
Hu Min said: "Private education is a very clear system. As a private capital, early childhood education, early education, vocational colleges, and private universities are places where we can play a role. Private capital education depends on its own blood and value creation. We are optimistic about this. We are currently setting up an industry fund that focuses on high school. We believe that education will ultimately solve the problem of going to school."
According to incomplete statistics of blue whale education, in 2016, a total of 13 companies set up education funds, involving a fund size of 25.1 billion yuan. Among them, Wei Chuang shares (002308.SZ) jointly established a 5 billion yuan industrial fund main investment kindergarten or kindergarten chain management group; Dianguang Technology (002730.SZ) 500 million yuan investment in Internet education. In February 2017, Li Sichen and Beijing Jingu Investment Management Co., Ltd. proposed to jointly designate a general partner to initiate the establishment of “Li Sichen Jingu International Education Industry Investment Fund†(tentative name), and the new channel participated in the fund investment. This is the first industrial investment fund in China to target school operating entities such as private schools and international schools. According to the interface news, the fund will focus on the first- and second-tier cities with more developed economies.
According to the financial report data, the performance of listed companies in education and the new three board companies are mixed.
According to incomplete statistics, more than 20 listed companies in the education sector have released 2016 performance forecasts, of which 14 listed companies have increased their 2016 results. At present, the performance of the education sector is pre-increased. Among the listed companies, the merger of profits brought by mergers and acquisitions during the reporting period has resulted in a small number of companies with rising profits:
Li Sichen's 2016 profit was 272 million to 310 million yuan, a year-on-year increase of 108.99%-138.19%. The increase in performance was mainly due to the acquisition of Kangbang Technology and other companies, which further increased the growth rate of net profit attributable to shareholders of listed companies. The Great Wall of Culture (300089.SZ) expects net profit attributable to shareholders of listed companies from January to December 2016 to be RMB 124 million to RMB 128 million, a year-on-year increase of 900.00% to 930.00%. The reason for such a large increase is due to the acquisition of 100% equity during the period. Joint venture education combined profit. New Nanyang (600661.SH) preview shows that the net profit of shareholders belonging to listed companies in 2016 was about 188 million yuan, a year-on-year increase of 210%. In March 2015, the company participated in the establishment of an education industry investment fund with a total scale of 1.05 billion yuan. A number of quality education boards will be incubated for the company. In addition, Xiuqiang shares (300160.SZ) expected net profit growth of 87%-112% in 2016. During the period, the company acquired whole-person education, and the consolidated statement resulted in a substantial increase in net profit.
In terms of the New Third Board, the number of educational companies increased sharply in 2016. Relevant data shows that the number of listed enterprises in education enterprises has reached 205, and 117 new ones were added in 2016, of which 37 have carried out fixed-income fund-raising, and accumulated funds totaled 2.828 billion yuan to acquire 14 mergers and acquisitions. According to the 2016 Interim Report, the revenue of the education sector increased by 46.91% year-on-year, and the net profit of the mother returned by 9.53%, which was ahead of the overall market.
Some analysts told the interface journalists: It is normal for listed companies seeking transformation in 2017 to rely on mergers and acquisitions to increase their education industry layout. Zhang Yongqi, founder of Global IELTS, recently said that he hopes that everyone will pay less attention to listing and care more about mergers and acquisitions.
When every round of investment turmoil comes, the huge amount of funds will bring infinite risks. It can be seen that the securitization of educational assets will bring more listed companies to invest and acquire. At the same time, how can the special education industry achieve a win-win situation with capital? The focus of the market.
In this regard, Hu Min told the interface journalist: "Now a lot of capital is directly going to the money, purely playing capital, financial consolidation statements, the book looks good on the stock market, but the education sector is directly at the risk of making money is very dangerous. Education can't be immediate, investment education, can't play pure capital, there won't be tomorrow."
Source: Network
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