Recently, China New Higher Edu Group Limited (02001.hk) released the full-year financial performance for the fiscal year 2024, sparking intense market discussions and significant stock price fluctuations. The editor attended the post-earnings conference roadshow of the company, paying close attention to the management's responses to key discussion topics.

Regarding the most discussed issue of suspending cash dividends and switching to distributing stock dividends, the editor learned that New Higher Edu chose to distribute stock dividends this time in order to increase the investment in high-quality development and seek a future layout based on improving the academic level. It is understood that New Higher Edu has already started the preparation work for the undergraduate assessment of schools in Gansu and HuaZhong; Yunnan schools have been approved to establish new master's degree awarding units at the provincial level; Northeastern schools are steadily progressing in applying to establish new master's degree awarding units at the provincial level; Guizhou schools are making good progress in applying for the construction of vocational universities at the undergraduate level, being formally included in the construction plan of vocational and technical universities in Guizhou during the "14th Five-Year Plan". In order to seize the opportunity to apply for undergraduate programs every 5 years, Luoyang schools and Guangxi schools are preparing in advance to apply to enter the local provinces' "15th Five-Year Plan" for establishing undergraduate programs. It appears that New Higher Edu has centrally arranged for 6 schools to start the work of improving the academic level, with 2 schools preparing for teaching evaluations, 2 schools striving for the establishment of master's programs, and 2 schools preparing to apply for undergraduate programs. For universities, these are all "major actions" in education. Whether the goals can be absolutely achieved remains uncertain, but facing the current opportunity to improve the academic level of schools, New Higher Edu chose to increase its investment in advance, deploy the improvement of its schools' levels in a planned and phased manner, and respond to uncertainty risks with a firm commitment to high-quality development, adhering to a long-term perspective, becoming a long-distance runner in higher vocational education, pursuing long-term benefits and sustainable development.

In the past three years, the operating performance of New Higher Edu Group has achieved stable growth, with a compound growth rate of income remaining above 15%, and the effects of the high-quality development strategy are considerable. In the fiscal year 2024, the total number of students on campus was reduced by 700 due to the optimization and adjustment of the student source structure, while achieving a 12.2% increase in income. New Higher Edu has achieved a graduation rate of over 95% for four consecutive years, with the rate of initial job placement for graduates of the 2024 academic year reaching 95.09% by August 31, 2024, with a 33.21% rate of high-quality employment, both reaching historical highs. However, influenced by changes in the overall economic situation, the continuous increase in the number of college graduates, and other factors, "employment difficulties" will be a challenge faced by all universities for a certain period in the future. If New Higher Edu can continue to maintain stable employment performance, it is expected to be very beneficial for the brand building of its colleges.

The management of New Higher Edu Group also conveyed confidence in the company's future development during the post-earnings conference roadshow, believing that the company's continued increase in investment over the past few years, with high quality at a reasonable price, has supported steady performance growth. In the fiscal year 2024, the company's total funds reached 2.32 billion yuan, an increase of 1.17 billion yuan from the same period last year, with a high growth rate of 101%, fully ensuring its future investments. On the liabilities side, the net debt ratio has decreased significantly from 44.4% to 28.8%, the interest coverage ratio has greatly increased from 8.77 times to 10.57 times, and the 80 million US dollars syndicated loan due in June 2024 has been successfully extended to 2027. The financial situation is steadily improving, with extremely low liquidity risk.

The management of New Higher Edu Group stated that in the face of future trends such as the declining population and increasing demand for higher education, the company is advancing the peak period of educational investment in advance, aiming to make early preparations, seize the initiative in future competition, actively respond to upcoming industry changes, and maximize the reduction of potential risks. The scenery is long and it's best to expand your vision. It is believed that with the steady improvement of the academic levels of the eight colleges and the continuous expansion of their influence, it will strongly support the company's healthy medium- to long-term development and effectively guarantee stable long-term returns for shareholders.

According to performance calculations, the current dynamic dividend yield of New Higher Edu Group exceeds 25%, which is very attractive. Considering the company's stable future internal growth, improvement in academic levels, and continued high-quality employment performance, if cash dividends are reinstated in the future, the valuation will be highly attractive, making it a good time to buy.