China New Higher Education Group Limited (“New Higher Education Group”, stock code: 2001) was successfully listed on the Main Board of the Hong Kong Stock Exchange today, with First Capital Securities Limited (“First Capital Securities”), a wholly-owned subsidiary of China First Capital Group Limited (“CFCG” or the “Group”, stock code: 1269) as the joint bookrunner and joint lead manager. New Higher Education Group was the fourth education institutions listed in Hong Kong this year, following Wisdom Education (stock code: 6068), Yuhua Education (stock code: 6169) and Minsheng Education (stock code: 1569).
A total of approximately 286 million shares were offered under the global offering of New Higher Education Group. The public offering was well received by the market and the price of shares was set at HK$2.78 per share, raising net proceeds of approximately HK$743 million. On its first day of listing, the shares of New Higher Education Group went up despite a bearish market. For the half-day session, it peaked at HK$2.81, which was approximately 1% higher than the offer price of HK$2.78, and closed at HK$2.79, recording a half-day volume of HK$95.4 million.
Supported by the policy and market demand, investment in China’s private education industry begins to pay off. In particular, higher education business shows considerable potential. As set out in the prospectus of New Higher Education Group, the Frost & Sullivan Report pointed out that China’s higher education industry was experiencing strong growth over the past few years, primarily driven by rising public expenditure and private investment. Total revenue generated by the sector has increased from RMB688.0 billion in 2011 to RMB940.8 billion in 2015 and is expected to increase to RMB1,384.0 billion in 2020. With growing household income, demand for higher education and talent with practical and readily applicable technical skills, improving teaching quality offered by private higher education institutions and government support, the private higher education industry in China is expected to expand.
New Higher Education Group operates two private institutions of formal higher education, namely Yunnan Technology and Business University (“Yunnan School”), which was the first private higher education institution in Yunnan Province to obtain the qualification to grant bachelor’s degrees, and Guizhou Technology and Business Institute (“Guizhou School”), the third private higher education institution established in Guizhou Province. New Higher Education Group focuses on providing applied sciences-based higher education of different fields through high quality employment-oriented education plans. In view of the market demand, Yunnan School has established over 50 market-oriented groups of majors, including those in the fields of business administration, information technology and engineering, accounting, architecture and civil engineering. Meanwhile, Guizhou School has established approximately 30 unique majors such as nursing, design and engineering as well as physical education. New Higher Education Group recorded a steady upward trend in the total number of enrolled students, which grew from 18,590 as of 30 June 2014 to 33,462 as of 31 December 2016. In terms of number of enrolled students as at the end of the last three semesters, it is one of the fastest growing applied sciences focused universities in China.
The steady increase in the number of enrolled students brings remarkable growth in New Higher Education Group’s operating results. From 2014 to 2016, its revenue from continuing operations for the year increased from RMB206.5 million to RMB341.0 million, representing a CAGR of approximately 28.5%. Based on the adjusted profit for the year derived by adding back the listing expenses incurred in the year ended 31 December 2016, the group’s profit for the year grew at a CAGR of approximately 27.3% between 2014 and 2016.
New Higher Education Group is the fourth new companies listed on the Main Board of the HKEx since the beginning of this year. The listing of its shares, along with that of Wisdom Education, Yuhua Education and Minsheng Education earlier, raised the net proceeds of a total of HK$4.301 billion. The stock performance of Wisdom Education, Yuhua Education and Minsheng Education was satisfactory, and as of the last trading day, the changes were 19%, 24% and -1% respectively (as compared to the changes of 4%, -0% and -3% of the Hang Seng Index in the corresponding period). This suggests the emerging private education industry has become a popular choice in the capital market.
Dr. Wilson Sea, the Chairman and Executive Director of CFCG, attended the listing ceremony upon invitation today. He believes that China’s education industry is thriving and many private schools with excellent teaching quality have funding needs. As a platform of operation, investment and financing in the education sector driven by “Education Investment plus Financial Services”, CFCG aims to identify such industry players and make investment or assist them in obtaining financing for development. It also seeks the cooperation with overseas education institutions to meet China’s huge demand with premium education resources from other parts of the world. Hong Kong, being an international financial centre that has close ties with the Mainland China, is the listing venue of choice for many Chinese private education institutions. Thus, it is expected that PRC private education projects listing in Hong Kong will become more common and the education sector will therefore continue to bloom. In view of this, First Capital Securities and First Capital Fund, both being subsidiaries of the Group, will carry on exploring opportunities to develop financial services for the education industry.