On 29 May 2018, China 21st Century Education Group Limited (“21st Century Education”; stock code: 1598.HK) was successfully listed on the main board of the Hong Kong Stock Exchange. First Capital Securities Limited (“First Capital Securities”), a wholly-owned subsidiary of China First Capital Group Limited (“CFCG”; stock code: 1269.HK), acted as the Joint Bookrunner and Joint Lead Manager in the listing of 21st Century Education in Hong Kong. Dr. Wang Hui, the Chief Financial Officer of CFCG, Ms. Li Minwen, the Chief Operating Officer of CFCG and Ms. Liu Chang, the Chief Operation Officer (PRC) and the Chief Operation Officer of First Capital Fund attended the listing ceremony, extending their warmest congratulations to the company.
The stocks of 21st Century Education were actively traded on the first day of listing and the share price reached the highest at HK$1.91 per share. The share price closed at HK$1.71 per share, up approximately 51.33% from its offer price of HK$1.13 per share.
In his speech at the listing ceremony, Mr. Li Yunong, the chairman of the board of directors and executive director of 21st Century Education emphasised that the day marked a crucial milestone in the development history of the group. As the first listed education group from the integrated region that includes Beijing, Tianjin and Hebei, Li said he felt extremely proud to assume a new, greater range of responsibilities. Leveraging a host of geographic advantages, 21st Century Education continues to provide a wide array of private education services while maintaining and consolidating the market position of the company and the private education sector of Hebei Province. Li added that the company would take advantage of this listing and strictly adhere to the listing rules to seize development opportunities in order to achieve better operational results to benefit the investors who highly recognised the values of 21st Century Education. Li added that he was confident about showcasing 21st Century Education with a better and more prosperous future.
Currently, 21st Century Education operates a total of 15 schools located in Shijiazhuang, Hebei Province, including one private college (Shijiazhuang Institute of Technology), six Saintach tutorial schools (comprising 11 Saintach tutorial centres) and eight Saintach kindergartens, through which it offers comprehensive education and tutorial programmes for students from kindergarten to college. According to the latest data in 2017, the segment revenues from private college, tutorial schools and kindergartens accounted for 56%, 27% and 17%, respectively. These schools are highly concentrated in the integrated area that encompasses Beijing, Tianjin and Hebei, leading to the strengthening and consolidation of 21st Century Education’s brand impact in the local private education market. Its college business ranks second in the integrated area that encompasses Beijing, Tianjin and Hebei while the education tutorial business and preschool business rank fourth and second in Shijiazhuang respectively.
The establishment of the Xiong’an New Area in April 2017 has increased the regional advantages of Hebei in the Beijing-Tianjin- Hebei integrated area. This integrated area has become more dynamic complemented by greater rapid development and a larger population size. Its strategic position and future development trends will substantially increase the demand for a large number of technical talents. According to the Frost & Sullivan Report, student enrollment in private schools throughout the integrated area is expected to increase at a CAGR of 7.6% between 2017 and 2021, significantly higher than the overall national increment rate during the same period. Moreover, the quickening pace of business transformation in the integrated area will continue to increase the demand for higher quality students with better training. All of these factors will undoubtedly help bring about greater growth opportunities for 21st Century Education.
Having cohorts of potential cross-generational students is another competitive advantage for 21st Century Education, which runs preschools, primary schools, middle schools and high schools all the way up to higher education levels. It is its educational philosophy that learning is a lifelong process and it should be as inclusive as possible in its student intakes and provide education programs that may appeal to students from toddlers to seniors The learning courses and service packages offered by their different schools and tutorial centres will ensure reliable, diversified and stable revenue flows for 21st Century Education. In recent years, the market demand for talents who possess practical and applicable skill sets across different industries has increased rapidly. This pressing need has helped speed up the growth of China’s private higher education sector. According to the Frost & Sullivan Report, the total number of students enrolled in private schools in China increased from 5.1 million to 6.8 million from 2011 to 2017, representing a CAGR of 4.1%. By 2021, this number is expected to increase to 8 million, representing a CAGR of 3.9% from 2016. The Shijiazhuang Institute of Technology managed by 21st Century Education will also benefit from the rapid growth of the higher education sector.
Many mainland education groups have chosen to list in Hong Kong during 2017 and 2018. It is a trend bolstered by governmental policies and the growth of capital markets. On one hand, the new Non-state Education Promotion Law implemented in 2017 has helped facilitate the asset securitisation process of some private education enterprises. On the other hand, the increase in the daily quota under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect in April this year has also further enhanced the liquidity of the Hong Kong stock market. Five education groups including Wisdom Education, China Yuhua Education, Minsheng Education, China New Higher Education and China Education Group were all listed on the main board of the Hong Kong Stock Exchange in 2017, and their stock prices maintained a significant upward trend throughout this year with the stock price of the newly listed Top Education Group jumping 108% in just seven trading days. All of these results hint at promising prospects for stocks from China’s education sector and are sure to further draw international investors’ interests to China’s education concepts.
First Capital Securities acted as the Joint Bookrunner and Joint Lead Manager for the public offering of 21st Century Education. This is the third consecutive time for First Capital Securities to provide financial services in the listing of educational enterprises in 2018, a testament to the influence and highly efficient execution of First Capital Securities in the financial markets. First Capital Securities has maintained close cooperative ties with various premier organisations in the underwriting of IPO securities. Moreover, First Capital assumed the responsibilities to provide underwriting services for the listing of China Xinhua Education, Top Education Group, China Yuhua Education, Minsheng Education, China New Higher Education and others, further proof of its solid experience and resource integration capabilities in the education sector.
CFCG said that it was a great honour for First Capital Securities to assume the roles of both Joint Bookrunner and Joint Lead Manager in the listing of 21st Century Education, which recognised and trusted the capabilities of First Capital Securities in security underwriting. CFCG will continue to keep a close eye on the latest industry trends while placing emphasis on enhancing its diverse investment and financial services in the area of “Education + Finance”. Through summarising the solid experience of the listed education enterprises in their development and strengthening collaboration and interaction with Chinese as well as overseas investors, CFCG will provide further support to the client with high net worth to leverage business opportunities in capital markets and continue to assist the listed enterprises in discovering and enhancing their values, all of which will result in mutual benefits and mutual development among a host of different parties.