icefishing| Profits fell by more than 90%. Intelligence Education slowed down its business expansion

Revenue fell by more than 30% and profits by more than 90%. This is the 2023 financial report handed over by Chuanzhi Education. On April 19, Chuanzhi Education held an online performance presentation meeting for 2023 to explain the reasons for the decline in performance. The decrease in the number of students, the withdrawal of leases and the impairment of assets brought about by business adjustment are all determinants of the poor performance of Chuanzhi education. The declining performance also led to the collapse of convertible bond financing planned to be issued by Chuanzhi Education in 2023. As the first A-share IPO listed education company, Chuanzhi Education has completed the transformation from vocational training institutions to academic vocational education schools in the past two years, but from the performance point of view, the establishment of vocational education schools has not brought it more profits at present. In this regard, Chuanzhi Education has also indicated that it will slow down the pace of business expansion, further increase revenue and reduce expenditure, and improve operational efficiency.

Both revenue and net profit fell

Despite being on the track of vocational education, the performance of Chuanzhi Education in 2023 is not bright. According to the financial report, the revenue of wisdom education will reach 5% in 2023.Icefishing.34 billion yuan, down 33% from the same period last yearIcefishing.43%IcefishingThe net profit belonging to shareholders of listed companies was 15.6298 million yuan, down 91.26% from the same period last year.

In response to the profit performance that fell by more than 90%, Chuanzhi Education responded at the performance meeting.IcefishingThere are four reasons, including the decline in training income caused by the decrease in the number of students enrolled, the reduction in profits caused by the surrender of the campus and the adjustment of personnel structure, the loss of outstanding trust products and the impairment of assets after business adjustment.

Judging from the financial report, the current revenue of Chuanzhi Education still comes from short-term training income. In 2023, intelligence education achieved short-term training income of 508 million yuan, accounting for 95.08% of revenue. The income of non-academic higher education was 9 million yuan, down 51.22% from the same period last year, accounting for 1.76% of the revenue; the income from secondary vocational education with academic qualifications was 5 million yuan, an increase of 219.73% over the same period last year, accounting for 0.93% of the revenue.

GE Wenwei, a partner of Duowhale Capital, believes that the decline in the performance of Chuanzhi Education releases a signal of the changing demand for talents in the IT industry. From the perspective of the industry as a whole, the demand for talents in the IT field is gradually slowing down. With the emergence of new technologies such as artificial intelligence and large models, the jobs of low-end general-purpose IT talents are gradually being replaced, and the number of jobs is shrinking, which makes intelligence education face difficulties in enrollment, resulting in a decline in performance.

GE Wenwei believes that in addition to the decline in enrollment in the C-end market, intellectual education is also facing challenges in the B-end market. The B-end business of wisdom education is currently opening industrial colleges. Under the current situation, the local budget is shrinking and the investment in industrial colleges will slow down.

Convertible bond financing has failed.

From the perspective of the business adjustment of intellectual education in the past two years, the establishment of a diploma vocational education school is an attempt to transform the track of intellectual education in vocational education. At the end of 2021, Chuanzhi Education invested in Suqian Chuanzhi Internet Secondary Vocational and Technical School; in 2023, Datong, a wholly owned subsidiary of Chuanzhi Education, applied for Datong data Science and Technology Vocational College.

Talking about the business actions of wisdom education in recent years, Yu Jinyong, a managing partner of education investment in Zhongguancun (000931), believes that from vocational training institutions to vocational education schools with academic qualifications, the choice of business in intelligence education is also based on the consideration of improving the company's ability to resist risks.

Yu Jinyong said that if enrollment and teaching are carried out only for the C side, it will be difficult to obtain long-term and continuous students. Different from other training, adult vocational education has a low repurchase rate of the same product, which requires continuous iteration of the product. If it is transformed into a school with academic qualifications and vocational education, the enrollment channel is relatively stable under the support of academic qualifications, and at the same time, it can also get support from the government, which is more stable.

In fact, for the construction project of Datong Internet Vocational and Technical College, Chuanzhi Education also applied for convertible bond financing of no more than 500 million yuan in 2023, which is planned to be used for the construction project of Datong Internet Vocational and Technical College after deducting the issuing expenses. In March this year, Chuanzhi Education issued a notice saying that 500 million yuan of convertible bond financing was terminated because it did not meet the issuing conditions.

In response to the performance presentation, Li Huoming, chairman and general manager of Chuanzhi Education, said that due to the impact of the overall economic environment in 2023, the number of students enrolled decreased, and the company's performance declined compared with the same period last year. The weighted average return on equity for the last three fiscal years (2021-2023) is expected to be less than 6 per cent. As a result of this change, the issue of convertible bonds no longer meets the conditions for issuance.

Increase revenue, reduce expenditure and optimize performance

Whether it is the suspension of convertible bonds or declining performance, the decline in the number of students is the biggest challenge facing wisdom education. In January this year, Chuanzhi Education announced that due to the decrease in the number of students applying, the company decided to slow down the construction progress of the IT vocational training capacity development project and the IT training and research institute construction project, so as to avoid the rapid expansion of the campus and the substantial increase in R & D team personnel, resulting in idle teachers and various kinds of teaching and R & D resources, which would adversely affect business performance.

From the perspective of the industry environment, many practitioners believe that the talent pattern in the IT field will show "polarization" characteristics, and the low-end posts represented by data labeling and high-end technical positions related to artificial intelligence will be the most needed talents in the market.

As a result, GE Wenwei said that if intelligence education wants to achieve a breakthrough and growth in performance, it needs to expand larger-scale talent training in lower-end areas, or to expand high-end talent training in the field of artificial intelligence. If we want to achieve the effect of the latter, intellectual education will face changes in talent, curriculum and organizational structure.

The financial report shows that in 2023, 63.4643 million yuan was invested in the research and development of wisdom education, which is basically the same as that in 2022. In terms of curriculum, intelligence education has set up artificial intelligence courses, covering machine learning, deep learning, data mining and so on. At the same time, in response to the ever-changing market demand, Chuanzhi Education has also developed three new courses: Hongmeng application development, integrated circuit application development (including embedded) and e-commerce visual design.

Centering on the challenge of how to boost performance, Li Huoming said that intellectual education will continue to take measures to increase revenue and reduce expenditure. In terms of open source, we will continue to invest in curriculum research and development in line with market demand, and at the same time increase online investment and strengthen advertising. In terms of cost-saving, wisdom education will also depend on the market situation to decide whether to reduce the leased space area or adjust and optimize the personnel structure of the campus whose enrollment is not as expected, so as to improve operational efficiency.

Zhao Boyu, a reporter from Beijing Business Daily.