EQS-News: Development Direction in Line with the National Policy of Higher Vocational Education Resulting in Remarkable Achievements of China New Higher Education Group  

Development Direction in Line with the National Policy of Higher Vocational Education

Resulting in Remarkable Achievements of China New Higher Education Group

BUSINESS HIGHLIGHTS

• The high-quality development of the Group has been fully supported: by strengthening the connotation construction and increasing investment on an ongoing basis, the Group has achieved fruitful results in high-quality teaching, employment and other aspects, and the brand effect of the Group and its schools has become prominent
• The average employment rate reached 98% by the end of 2021, and the employment rate of each school received top ranking from all provinces
• Relying on the high-quality integration capabilities, the Group gives full play to the advantages of professional empowerment and comprehensively improves the school operation strength of newly added Zhengzhou School, with remarkable results
• With a distinct school operation model of application-oriented universities, the Group cumulatively cultivated more than 400,000 high-quality technical talents for the society to serve the local social and economic development
• The development direction implemented by the Group is consistent with the national policy which strongly supports the development of higher vocational education
• With firm step of high-quality development, the performance showed steady growth: the total revenue increased by 30.7% year on year, the net profit attributable to parent company increased by 17.2% year on year

(25 April 2022 -Hong Kong) a leading higher vocational education group - China New Higher Education Group Limited ("New Higher Education Group", together with its subsidiaries, collectively referred to as the "Group", stock code: 2001.HK) is pleased to announce the interim results for the six months ended 28 February 2022.

As a long runner in the industry, the Group actively responds to the call of the State to support and encourage the high-quality development of higher vocational education, adheres to the concept of "Student As The Center", increases investment in connotation construction, and continuously improves the quality of school operation. In the meantime, the Group maintains steady growth of performance, and continues to reward shareholders to realize the longer-term and more sustainable development. During the reporting period, the Group made great progress in all aspects, especially school operation level and performance.

HIGH-QUALITY SCHOOL OPERATION ACHIEVEMENTS AND INVESTMENT

The Group continued to implement the high-quality development strategy, strengthened the connotation construction, and continued to invest, resulting in significant improvements in the employment quality, teaching level, brand effect and school operation strength, and great progress in its performance: the total revenue increased by 30.7% year on year to RMB1.21 billion, revenue from principle business increased by 31.7% year on year to RMB1.04 billion, and the net profit attributable to the parent company increased by 17.2% year on year to RMB345 million, marking a further improvement in the sustainable and high-quality development capacity of the Group.

1. Remarkable achievements in high-quality employment: the Group continued to increase investment in high-quality employment, such investment increased by 225.3% compared to the same period of last year, resulting in excellent high-quality employment achievements. The average employment rate of the Group reached 98% at the end of 2021, and the employment rate of each school received top ranking from all provinces. Among them, the employment rate of Gansu School and Guangxi Schools ranked the first among similar schools in its province. Guizhou School was selected as one of the top 100 employment typical cases by the Ministry of Education, and Yunnan School was awarded the National College Graduate Employability Training Base. At the end of 2021, the number of high-quality employment increased by 76% year-on-year, and the number of internships in famous enterprises exceeded 10,000. In March 2022, the Group reached a strategic cooperation with No. 301 Hospital (the Chinese PLA General Hospital) on internship and employment, laying the foundation for high-quality employment of students from nursing major.
2. High-quality majors and courses construction, and fruitful awards and honors: four majors, including the major of nursing and electrical automation, have been evaluated as national first-class undergraduate majors, various majors and courses were approved as provincial first-class undergraduate majors, first-class undergraduate courses and provincial characteristic advantageous discipline groups and backbone major groups. During the reporting period, our students won 180 national awards in top comprehensive discipline competitions.
3. Prominent brand effect of the Group and the schools receiving highly recognition by the society: the Group was awarded the "2021 Vocational Education Brand with Reputation and Employment Influence" by Tencent Education Ceremony of the Year 2021 and "the Listed Enterprises of the Year 2021" by the Bloomberg Businessweek/ Chinese Edition. Yunnan School was ranked the first in Yunnan Province among the "Competitiveness Ranking of the Private Undergraduate Colleges and Universities in China"（中國民辦普通本科院校競爭力排行榜）; Northeast School was recognized as a first-class application-oriented university in China by the "Ranking of 2022 China Private Applied University Alumni Association (Category I)" (2022校友會中國民辦應用型大學排名（I類）); and both Luoyang School and Zhengzhou School were selected as competitive brands of employment of private education in Central China（中原民辦教育就業競爭力品牌）.
4. Playing advantages of professional empowerment to improve the school operation strength: taking Zhengzhou School as an example, it takes on a new look after 180 days. Zhengzhou School was approved early education major (a state-controlled major); built a "refractory materials" laboratory with the local government, making it the only higher education institution in China to offer a major in "refractory materials"; obtained the quota of 5,000 government-subsidized training, achieving a breakthrough from scratch in government-subsidized training business; upgraded the commercial business on campus, doubling the commercial revenue year-on-year; and greatly improved the campus facilities and environment.

The Group forges firmly onwards the path of high-quality development, focuses on building a high-quality education system, actively increases investment in connotation construction during the reporting period, upgrades school operation conditions and educational environment, laying a solid foundation for long-term sustainable high-quality development in the future.

1. The Group has continued to increase investment in four aspects including talents, hardware, teaching and digitization to fully support high-quality development of the Group:

• In terms of talents, the Group increased its investment in the cost of teaching staff by 31.5% year on year, introduced more than 500 high-end talents, with the number of teachers with master's degrees and above increased by 21% year-on-year, and the overall salary of the core staff was increased by 8% to build a high-quality teaching staff team.
• In terms of hardware, RMB150 million was newly invested in this academic year, we have continued to build and upgrade experimental training rooms, smart classrooms and student's self-study spaces, etc. At the same time, we have newly increased investments of RMB110 million in the improvement of campus environment, upgraded the education space and continued to improve the living environment for students.
• In terms of teaching, the investment in professional construction, teaching and research, reformation, famous enterprise cooperation and other related costs increased by 120.2% compared to the same period of last year. The Group have conducted advantageous major construction with well-known universities in China and overseas. The Group has committed to building a leading pre-school teaching major in China by cooperating with the Snow Laboratory of Harvard Graduate School of Education. We have reached a strategic cooperation with Xi'an Jiaotong-Liverpool University to build an international high standard education system. The Group have obtained remarkable achievements in majors and courses construction, and students won 180 national awards in top comprehensive discipline competitions.
• In terms of digitization, the Group has upgraded the intelligent cloud teaching platform, adopted cloud computing technology and integrated artificial intelligence technology to significantly improve teaching efficiency, so as to install a "smart engine" for the modernization of education.

1. Deployment in the Sunrise Industries and Deepen the Collaborative Education with Enterprises: adhering to the national strategy of the "14th Five-Year Plan", the Group optimized the structure of professional layout, opened eight new majors for the sunrise industries, including intelligent manufacturing engineering, big data technology and network and new media, and accelerated the construction of majors relating to the people's livelihood in urgent need, opening new majors in community-based rehabilitation, infant and child care services and management and early education; cooperated closely with 1,754 well-known domestic and foreign enterprises such as Huawei and Tencent, built 34 industrial colleges such as Industry-Education Integration Institute of Jingdong, the Intelligent Manufacturing Industries Institute of Siemens and the Artificial Intelligence Institute of Anhui USTC iFLYTEK（科大訊飛）; opened 163 employment classes with famous enterprises such as 360 Network Security Shield Class, and the talent training mode of the Group is becoming more and more mature.

THE HIGH-QUALITY DEVELOPMENT DIRECTION OF THE GROUP IN LINE WITH THE NATIONAL POLICY OF HIGHER VOCATIONAL EDUCATION

The development direction implemented by the Group is consistent with the national policy which strongly supports the development of vocational education. In October 2021, the Opinions on Promoting the High-Quality Development of Modern Vocational Education(《關於推動現代職業教育高質量發展的意見》) was issued, clearly supporting and encouraging listed companies and industry leaders to develop vocational education, and encouraging application-oriented undergraduate schools to carry out vocational undergraduate education. In December 2021, the Office of the Academic Degrees Committee of the State Council issued the "Opinions on the Authorization and Awarding of Bachelor's Degrees in Vocational Schools at the Undergraduate Level", which makes it clear that the authorization, awarding and management of bachelor's degrees in vocational education at the undergraduate level will be subject to the same rules as those for general undergraduates, while highlighting the characteristics of vocational education. The undergraduate-level vocational education degree certificate will thus be given the same status as the general undergraduate degree in terms of effectiveness and application value. In January 2022, the Central Government issued the "14th Five-Year Plan for Vocational Skills Training" for the first time, aiming to improve the ability of workers and relieve the pressure of employment, and the higher education industry will continue to benefit from the favorable policy on vocational education. In February 2022, the Ministry of Education announced the work focus of vocational education in 2022, which clearly supports vocational education and the private higher education industry. The first major amendment of the Vocational Education Law has recently been completed since its implementation in 1996, that the Standing Committee of the National People's Congress approved the amended Vocational Education Law on20 April 2022. The new Vocational Education Law, which will become effective on 1 May 2022, clarifies that vocational education and general education have the same important status, supports the social forces to extensively participate in vocational education, fosters, guides and backs up enterprises and other social forces to organize vocational schools and vocational training institutions in accordance with the law, and encourages enterprises to participate deeply in the integration of industry and education, as well as school-enterprise cooperation. The Group will continue to benefit from the favorable policy on vocational education, and have much clearer direction and path of its high-quality development.

WITH THE ATTRIBUTES OF A TOP-PERFORMING PUBLIC UTILITY STOCK

The higher education industry features a high barrier to entry, with high certainty of three-to-four-year learning path after students' admission. The national policy of supporting and encouraging the development of higher vocational education has never changed, and the Group will steadfastly follow the path of quality and connotative development, focus on organic development, continue to increase investments, and improve school operation capability, maintaining steady growth in its performance.

On this basis, the Group has the attributes of a top-performing public utility stock in the Hong Kong stock market: stable performance growth, solid investment returns, sufficient cash flow, high safety margin (Forward PE: 4.3 times, source: Bloomberg) and steady dividend payout (it has distributed dividend every year since listing, and the dividend payout ratio of the recent two times has reached 50%).

Looking forward to the future, the Group will practically implement three "Persistences": continuing to follow the path of high-quality and connotative development and focus on organic development, to create and provide high-quality vocational education opportunities with high-quality teaching, high-quality employment and high-quality experience for all our students; strengthen the attributes of top-performing public utilities stocks in the Hong Kong stock market. In the future, the Group will continue to be a government-supported, long-term sustainable higher vocational education group with high quality development, to achieve long-term win-win situation with investors by providing a predictable, long-term and stable performance growth; continuing to adhere to "Student As The Center", and deliver high-quality technical and skilled talents with innovative spirit and practical capability, trustworthy and social responsibility for the society, and create greater value for the society.

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About China New Higher Education Group

China New Higher Education Group Limited is a leading higher vocational education group in China with more than 20 years of higher vocational education experience. The Group focuses on providing high-quality higher vocational education in various fields and is committed to cultivating application-oriented and high-quality technical skill talents for the country, helping students gain high-level employability and achieve a wonderful life. As a leader in high-quality employment, the Group won the title of the Top 50 National Employment of the MOE with an average employment rate of approximately 98%, much higher than the national average. The group's network of schools has covered Yunnan, Heilongjiang, Hubei, Gansu, Guizhou, Henan and Guangxi provinces.

The Group became a constituent stock of the Hang Seng Composite Small Cap Index and the Hang Seng Consumer Goods & Services Index in the Hang Seng Composite Index Series in August 2017, and was included as a constituent stock of the MSCI China Small Cap Index in November 2017 and included as a constituent stock of Shenzhen and Hong Kong Stock Connect in March 2018.