Our reporter Xu Jie
Trainee reporter Jin Weixing
It has been nearly a year since the "double reduction" policy was implemented, and the transformation path of K12 education and training enterprises has gradually become clear, aiming at vocational education, quality education, private higher education, education informatization and other fields.
How has the company’s transformation performed this year?
In this regard, the "Securities Daily" reporter conducted a field visit.
Reduce spending into the mainstream
It is difficult to say that the transformation is successful
A year ago, K12 education and training companies generally emphasized economies of scale.
Judging from the performance of more than 10 listed education companies focusing on K12 business, high marketing expenses, customer acquisition costs, and low user retention have resulted in only a few companies achieving stable profitability.
In July 2021, with the implementation of the "double reduction" policy, the "money-burning expansion" model came to an abrupt end, and K12 education and training companies began to seek transformation.
"Securities Daily" reporters found that this transformation is mainly concentrated in three aspects, the most common of which is focused on education and training sub-tracks, such as vocational education and quality education; followed by education informatization, including educational intelligent hardware, SaaS Software services and cultural services, etc. In addition, it also includes expansion and attempts to new fields, such as live e-commerce.
On one side is the greatly shrinking subject training business, and on the other side is the new business that has not yet formed a scale.
In the third and fourth quarters of last year, many K12 education and training companies experienced a sharp decline in revenue and increased losses.
However, judging from the first-quarter results released by some companies this year, they have begun to show a narrowing of profits or net losses.
Among them, Gaotu, Yiyi Education Technology, and Xueda Education have all achieved profits.
In the first quarter of this year, Gaotu achieved a net profit of 53.72 million yuan, compared with a net loss of 1.43 billion yuan in the same period in 2021; the net loss of education technology narrowed to 24.8 million yuan, a significant decrease from the loss of 660 million yuan in the same period last year, and the adjusted The net profit was 9.9 million yuan, which was the company's second consecutive quarterly profit after the fourth quarter of last year; Xueda Education achieved a net profit of 1.17 million yuan, although the non-net profit was -4.9 million yuan, but compared with the same period last year and the third The quarter and the fourth quarter improved significantly.
In addition, 51Talk, NetEase Youdao and other companies also handed over significant profits or narrowed losses in the transformation business in the first quarter of this year.
"It's hard to say which one has successfully transformed. Although individual companies seem to be profitable, this is achieved by reducing expenses and other means. It is not a sustainable model in itself. It depends on its cash flow and the income of its main business. In the next two or three years, the performance will continue to grow, the business will form a rigid demand, and the customer will form a considerable base to be called healthy." Feng Bin, a distinguished practice professor of Shanghai International CTO College and a part-time MBA tutor of Nanjing University, told the "Securities Daily" reporter.
"Overall, the transformation has not yet succeeded. Those companies that have switched to vocational education are actually not competitive and cannot compete with the brands that have been in the field of vocational education before." Wu Jincao, chief analyst of Soochow Securities, told reporters express.
Quality education and training institutions
Registration is not good
On June 24 and 25, a reporter from Securities Daily visited the New Oriental Youneng Middle School Education and Xueda Education Yuetan Learning Center located in Xicheng District, Beijing.
The announcement posted by New Oriental showed that offline teaching had been stopped in August last year.
According to the announcement of Xueda Education, the opening was suspended in March this year due to the impact of the epidemic, and the relevant internal teaching facilities are still complete.
The summer vacation is approaching, and the situation of quality education and training institutions is not optimistic.
The reporter visited 5 quality education institutions in Tongzhou District, Beijing, including basketball, musical instruments, eloquence, art and programming.
Among them, the basketball training institution is currently closed due to epidemic prevention and control. The reporter contacted its founder by phone, who said that enrollment has been tepid during the epidemic.
The programming training institution performed relatively well, and there were parents in the hall waiting for their children to finish class.
Eloquence training, musical instrument training and art training institutions are also open, but with fewer students.
The relevant person in charge told the "Securities Daily" reporter that at present, it is mainly to maintain old students, and it is difficult to recruit students. Compared with before the "double reduction", the number of new students has decreased by one-third, "the reason is that the school has been extended after the implementation of the "double reduction". The school provided students with relevant quality training courses, while superimposing the impact of the epidemic."
The person in charge of an offline training institution located in Pinggu District, Beijing told the "Securities Daily" reporter, "The company is currently in a state of loss and originally hoped to take a break in the summer vacation, but this year's registration and consultation situation is obviously not as good as in previous years, and the repurchase situation is not as good. Ideal. Parents are generally worried about the closure of institutions or the epidemic causing them to be unable to attend classes.”
Some parents told the "Securities Daily" reporter that their children are studying in public primary schools, and after school in the afternoon, the school arranges "comprehensive expansion" courses, including seven major groups, moral education, intellectual education, physical education, aesthetic education, labor education, and academic counseling. Large variety, 45 courses.
Some parents told reporters that their children's school had arranged special courses such as photography, badminton, basketball, calligraphy and seal cutting, and choir, and also arranged evening self-study in the evening.
It can be seen that the quality education work in the school is being carried out in an orderly manner.
Vocational Education Track
Can it carry the K12 transformation dream?
"Double reduction" has been implemented, and K12 subject training has been cold. At the same time, vocational education has ushered in a period of development opportunities.
In the months after the "double reduction" was implemented, policies related to vocational education were successively introduced.
For example, the "Regulations on the Implementation of the Law of the People's Republic of China on the Promotion of Private Education" will be officially implemented on September 1, 2021, and the policy of the state to encourage enterprises to hold vocational education has been determined at the regulatory level.
In October 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Promoting the High-Quality Development of Modern Vocational Education", which requires vigorously promoting the high-quality development of modern vocational education, encourages listed companies and leading enterprises in the industry to hold vocational education, and encourages various enterprises. Such enterprises participate in organizing vocational education in accordance with the law.
The newly revised "Vocational Education Law of the People's Republic of China" will come into effect on May 1, 2022, aiming at the integration of industry and education and school-enterprise cooperation, supporting social forces to hold vocational schools, and promoting the integration and mutual recognition of academic achievements in vocational education and general education. make provisions.
According to the monitoring data of "Dianshubao", a large database of Netease, in 2021, the number of online vocational education financing in China will be 38, with a financing amount of 6.193 billion yuan, while the number of financing in 2020 will be 15, with a financing amount of 1.71 billion yuan. Both the number and the amount have grown substantially.
From January to April 2022, 53 companies in the education industry received financing, nearly half of which were vocational education companies.
Driven by policy and demand, some K12 institutions have turned their heads.
NetEase Youdao has specially established the "Youdao Adult Education Division", which integrates the services and teams of Youdao Premium Courses for Adults, NetEase Cloud Classroom, and Chinese University MOOCs, and concentrates resources on the research and development of adult courses.
TAL launched the adult education brand "Qingzhou", which owns three sub-brands of Qingzhou Postgraduate Examination Help, Qingzhou Exam Full Score and Qingzhou Study Abroad, covering three areas including postgraduate entrance examination, language training, and study abroad.
Gaotu has also completely divested its K12 subject training business, and has fully transformed into adult training and vocational education. Its business covers quality education and training, adult education and training, vocational education and training, overseas study services and intelligent learning services.
Chen Liteng, a digital education analyst at the E-Commerce Research Center of Netease, believes that vocational education is a "golden track" recognized and supported by the state, and the non-academic vocational education sector is the focus of attention.
But can the vocational education track carry so many companies?
A person from an investment institution told reporters, "compared to the K12 track, vocational education has never been a strong gold-absorbing industry. Its overall revenue and profit levels are lower, and its presence is weaker."
According to the industry classification statistics of Flush, there are currently 21 education stocks in A-shares.
Among them, the companies mainly engaged in non-academic vocational education include Zhonggong Education, Chuanzhi Education and ST Kaiyuan.
However, in terms of performance, in the first quarter of 2022, only Chuanzhi Education, which focuses on IT training, achieved a year-on-year increase in revenue and net profit.
In fact, since the beginning of this year, the two former star companies in the vocational education field have been pushed to the forefront of public opinion.
In March, the owner of Wanmen University, known as "China's first online university", was accused of "running away with money".
The advertisements are overwhelming, "Let's start the class", and it is also deeply involved in layoffs this year.
Insiders of Kai Lei explained to the reporter of "Securities Daily", "Every year, some employees will be optimized to help the company reduce costs and increase efficiency."
Judging from the current transformation results, the vocational education business has not been able to support the expectations of K12 institutions.
For example, after the transition to vocational education, Gaotu will turn losses into profits in Q4 in 2021 and remain profitable in Q1 in 2022. However, the revenue in these two quarters has fallen sharply year-on-year, and revenue in Q1 in 2022 will decline by more than 60% year-on-year.
There are also listed companies that have finally "saved" profits and turned losses after reducing sales and marketing expenses.
On the whole, for the vocational education industry, it is difficult to see companies with a market value of 100 billion yuan like K12.
"After the implementation of the 'double reduction', many discipline training institutions have transformed into non-academic vocational education, and industry competition has intensified. Under this background, how to quickly form a competitive advantage and establish a sustainable and large-scale profit model has become a problem that enterprises need to consider. ” Chen Liteng said, “For enterprises, building word-of-mouth is very important. Only by laying a good foundation for the brand and enhancing the brand’s premium capability can better customer acquisition and conversion.”
Xiong Bingqi, Dean of the 21st Century Education Research Institute, said, "To enter vocational education, you must do education, not big business. Especially K12 institutions must learn from the development and governance of disciplinary institutions, and do not repeat the same mistakes. Education, on the one hand, will intensify the competition between the original institutions, and the profit prospects are not optimistic; on the other hand, it is likely to intensify the new involution, and when this happens, the regulatory authorities will inevitably take action to govern.”
The transformation effect is relatively slow
Take a long-term view
"The transformation of K12 education and training enterprises has three characteristics: lack of preparation, transformation requires long-term preparation and accumulation, these enterprises did not prepare in advance; lack of ability, transformation requires corresponding technical and ability support, some enterprises do not have the ability to The ability to quickly open up new fields; lack of patience, and transformation requires 3 to 5 years of medium and long-term planning. At present, the performance of enterprises is generally impatient.” Yu Hong, an expert in the education industry and dean of the Deren Micro-Lesson Research Institute Ze told the "Securities Daily" reporter that the more fundamental reason is that companies pay too much attention to the short-term micro-factors that affect their development, while ignoring the long-term macro-factors that affect their development.
Therefore, if K12 education and training enterprises want to develop further, they need to have a sharper insight into the macro factors that affect their long-term development, and at the same time rebuild the development theory.
First of all, it is necessary to clarify the "center": whether it is for survival or for development.
After establishing the direction, it is necessary to think about three points - clarify the development principles, transfer or rebuild core competencies, and prepare for long-term development.
In this regard, Yu Hongze proposed several transformation directions: first, focus on subdivided populations and focus on specialization and newness; secondly, according to the macro direction of the country's demand for future vocational and technical talents, cultivate talents with a combination of knowledge and skills; in addition, , the direction of combining with technology may become a breakthrough, such as cutting into the educational scene through the combination with the metaverse.
Feng Bin believes that K12 education and training enterprises have strong product design capabilities, Internet technology capabilities, customer service capabilities and market promotion capabilities. It is difficult for traditional vocational education institutions to have the global resource integration capabilities of K12 education and training enterprises. It is difficult to teach classes for tens of thousands of people at an ultra-low cost.
Yu Hongze told the "Securities Daily" reporter, "Although the existing vocational education companies have developed to a certain stage, there are still many places beyond their capabilities. Therefore, top companies in various industries need to participate, such as Huawei and Baidu. , New Oriental, TAL and other leading companies, so as to support scene-based technology, capital, talents, etc. for vocational education.”
In general, compared with the just-needed and standardized K12 track, in the current new track, it is difficult to achieve standardization in both quality education and vocational education, and it is difficult to form a scale effect.
The transformation effect of various K12 education and training companies is relatively slow.
After experiencing a huge trough, it remains to be seen whether K12 education and training institutions can usher in new disruptive development ideas in the future.
(Securities Daily)