China New Higher Education Group Announces 2020.831 New Fiscal Year Results Continuous Strong Organic Growth Expected External Contributions in the Future Huge Room for Valuation Improvement

Immediate release                                                  1 December 2020

(Stock code: 2001. HK)

China New Higher Education Group Announces 2020.831 New Fiscal Year Results

Continuous Strong Organic Growth

Expected External Contributions in the Future

Huge Room for Valuation Improvement

(December 1, 2020, Hong Kong) China New Higher Education Group Limited ("New Higher Education Group", collectively called the "Group" together with its affiliated companies; stock code: 2001.HK) is pleased to announce the financial results of the fiscal year ended 31 August 2020 (the "Review Period"). For the 2019/2020 academic year, the total revenue increased by 69.6% year on year, the gross profit increased by 97.5% year on year, the net profit increased by 124.3% year on year, the net profit attributable to owners of the parent increased by 127.3% year on year, the organic growth has been going strong, which maintains a leading growth rate in the country.

The Group's Position

• Practitioner of Collectivized School Operation: Established in 2005, the Group has now formed a replicable collectivized school operation model.
• The propeller of application-oriented Universities: The Group is one of the initiators and vice-chairman unit of the Association of Universities (Colleges) of Applied Science of the MOE.
• Leader of High-quality Employment: The Group won the title of the Top 50 National Employment of the MOE.
• Pioneer of Cross-regional Layout: The Group started to operate schools in different provinces in 2009, and has built up its school network in 7 provinces in China.

• Forerunner of Organic Growth: The Group's organic growth rate has remained stable at around 20% over the past three years, leading the industry

Financial Highlights

• The total revenue amounted to RMB1.46 billion, up 69.6% YoY;
• The gross profit amounted to RMB620 million, up 97.5% YoY;
• The profit before tax amounted to RMB550 million, up 127.2% YoY;
• The net profit amounted to RMB480 million, up 124.3% YoY;
• The net profit attributable to owners of the parent amounted to RMB430 million, up 127.3% YoY

*On 29 July 2020, the Group announced to change its financial year-end date from 31 December to 31 August.In order to provide meaningful comparative information, the Company prepared pro forma financial information covering the twelve-month ended 31 August 2019 and 31 August 2020.

Business Highlights

• Strong organic growth: In the 2020/2021 academic year, the Group's student enrollment was up nearly 11% year on year, which totaled over 125,600. Following the continuous enrollment expansion in higher vocational education, the total number of enrolled students of the Group will be further increased; The compound annual growth rate of the student enrollment is 32.3% during the past three years;
• Internal acquisition first followed by external:Internally completed the further acquisitions of minority interests in Henan School and Guangxi Schools; Externally acquired the stake in a training institution (Yunnan Vocational School);
• Sufficient capital reserves:Completed the issuance of USD 100 million of convertible bonds and approximately USD30 million of top-up placement.The coupon rate was only 1%, the conversion premium rate was 18%, and it's one of the lowest discounts in the industry of the year;
• Online education plan:the Group foreseed the future of digital technology years ago and then strategically planned the online education and teaching platform before the outbreak of the epidemic;
• Actively respond to the epidemic:During the public health event period, none of the teachers nor students were infected in the Group; upgraded online education and teaching platform to meet the online education demand of all the teachers and student, with the number of clicks reaching 400 million.The number of courses built on the online teaching platform is over 4,000, which responded to the advocacy by the government and educational authorities, realizing the principle of "delay backing to school, no delay in teaching andlearning".

Financial Review

"Two-wheel driver" of organic growth and value investment, major businesses continue to rise: In the 2019/2020 academic year, revenue from principal businesses (after restoration*) amounted to RMB1.33 billion, representing an increase of 82.9% compared to the 2018/2019 academic year.

Adherence to high quality development with continuous improvement of teaching investment: Centred on the principles of "high-quality development" and "students-orientation", the Group dedicated to the improvement of employment quality, campus environment, and student's experience, increasing the investment in enrollment, teaching, employment, logistics and epidemic prevention in the four domains of talents, hardware, teaching, and systems. In the 2019/2020 academic year, cost of sales amounted to RMB680 million, representing an increase of 63% and accounted for 74.2% of the total cost, up 7.2ppt compared to the previous year.

Strong profitabilitywith profit continuing to rise: The net profit (after restoration*) increased by 144.9% to RMB530 million; the net profit attributable to owners of the parent (after restoration*)  increased by 150.5% to RMB480 million.

*Due to the impact of COVID-19, RMB 37.19 million was refunded for boarding fees and RMB 7.02 million was refunded for logistic fees during the 19/20 academic year.

Business Review

High-quality development of schools of the Group

The Group highly focused on quality development, taking high-quality employment as the leading task, aligned with the popular industry and leading enterprises, to comprehensively promote the quality of teaching, key majors, school-enterprises cooperation, innovation and entrepreneurship, and professional skills. Meanwhile, the group take students'studing and living experience into consideration, improving campus landscaping by upgrading facade design of buildings, interior design of indoor and other outdoor environmental effects.

Distinctive Features of All Schools

Yunnan School attaches great importance to entrepreneurship and innovation and has become the first private school in China to host the "innovation, creativity and entrepreneurship" competition of national college students. which was held by Zhejiang University and other public universities in the past;

Guizhou School has improved the campus environment and infrastructure, such as indoor visual effects of school libraries, classrooms, lecture halls, canteens, student apartment, etc., as well as outdoor environmental effectsof the school gate, such as flower sea and red maple forest;

Central China School ranks first in the province in terms of job satisfaction of graduated students and has been named the advanced collectives of college admissions team in Hubei province and one of the most popular colleges on the admissions information website of Central China;

Northeast Schoolopened 19 new elites classes for 9 majors, and the tuition fees of the elite class were as high as RMB25,200, 30% higher than other majors in 2020. The school jointly established the first joint demonstration center of intelligent manufacturing technology in northeast China with Siemens (China), as the only undergraduate major in the province and opened for enrollment nationwide;

Henan School has carried out school-enterprise cooperation with several well-known domestic enterprises, such as cooperation with Alibaba's Tmall on the strategic training base. The cumulative sales of students participating in Tmall's "Double Eleven" reached RMB2 billion in 2020;

Guangxi Schools have adopted the "Qiduo.net" employment platform to improve the employment level. So far employment rate of graduates reaches 96%, far better than those of similar schools within the region. It was reported to the Ministry of Education as a typical case of employment in schools in Guangxi autonomous region;

Gansu College has achieved the first employment rate of undergraduate colleges in Gansu province in 2020 so far, surpassing Lanzhou University and other well-known public universities.

Application-oriented School Running, Training High-quality Technical Talents to Serve Regional Development

In response to the call of the State and education authorities, the Group provides modern vocational education services and cultivates high-quality technical and skilled talents who are application-orientedfor serving regional development. Intergating with the international OBE education and teaching model, the Group has put into practice application-oriented talent training with a focus on the professional structureof new medicine, new liberal arts and new engineering; School-enterprise "dual" education, as well as in-depth cooperation with over 1,100 famous enterprises; Over 1,000 construction, production and education integration bases.

Our core investment has achieved gratifying results. During the review period, over 550 national，provincial, municipal and other awards have been granted to theschools. The technical talents cultivated by the schools have become the backbone of serving the local economy. For example, 7 out of 10 people in Jingdong e-commerce operation team of Henan Province come from Henan school; 2 out of every 5 technicians of Huawei ecosystem in Yunnan Province are students from Yunnan School; 1 out of every 6 construction engineering talents of Sinohydro Bureau 7 Co., Ltd., graduated from Guizhou School.

Outlook

Strong competitiveness of organic growth with expected growth rate: in the past three years, the organic growth rate of the Group has remained stable at around 20%, maintaining a leading position in the industry. The average tuition fees were far below the average market level, with huge growth potential in future;

Robust self-founding and acquisition in the future to promote expansion of the school reach: the Group accelerated its deployment by focusing on the national strategies of "the coordinated development of the Beijing-Tianjin-Hebei Region, development of the Yangtze River Economic Belt, construction of the Guangdong-Hong Kong-Macao Greater Bay Area and construction of an economic circle covering the area of Chengdu and Chongqing". It is planned to commence the construction of the Greater Bay Area project in early 2021; also, focusing on the target areasto promote its self-founding and acquisitions; and providing high-quality education and teaching ability through mature operation management to cultivate more high-quality application-oriented talents for the society.

Huge room for valuation improvement: the Group's valuation multiples are far below the industry average. With the continued strong organic growth and the inevitable results of high-quality development of the Group, coupled with future extensive growth, a better future of the Group can be expected.

Mr. Li Xiaoxuan, founder and chairman of the board of directors of the Group, said: "In 2020, the Group's adoption of Two-wheel Driven 'organic growth + value investment' growth strategy has been recognized. In the future, the Group will continue to adhere to the path of high-quality development, constantly improve the social benefits of running schools, continuously improve the learning experience and employment level of students, and promote the 'robust self-founding and acquisition' to achieve the long-term and sustainable development goal of 'inclusive symbiosis with organic growth and value investment', and provide more high-quality application-oriented talents for the society to create greater value for social development."

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About China New Higher Education Group Limited:

China New Higher Education Group Limited is a leading private higher education group in China with nearly 21 years of education industry experience, specializing in providing higher education which focuses on applied sciences. The Group endeavors to help each student maximize their potential and live their life to the fullest. Since 2009, the Group has been operating schools in different provinces and regions, and its current school network covers 7 provinces in China, including Yunnan, Guizhou, Hubei, Heilongjiang, Henan, Guangxi, and Gansu.

The Group provides high quality higher education in a wide selection of fields in applied sciences. Its courses are designed to equip students with practical and readily applicable skills, helping to prepare them for the job market. 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 above 97%. 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.

This press release is distributed by Wonderful Sky Financial Group Limited on behalf of China New Higher Education Group Limited.

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Wonderful Sky Financial Group Limited

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