Shanghai Gench Education Group Limited

上海建桥教育集团有限公司

(Stock code:1525)

Gench Education Announced 2019 Annual Results

Adhere to high-quality teaching as the core,

 achieved steady business growth

Revenue increased by 18.1% year-on-year to approximately RMB 501.4 million

On 30 March 2020, Shanghai Gench Education Group Limited (“Gench Education” or the ”Company”, together with its subsidiaries, the “Group”, Stock Code:1525) -- the largest private higher education group in Shanghai, delightedly announced its first annual results for the year ended 31 December 2019(the “Reporting Period”) since the successful listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited on 16 January 2020.

During the Reporting Period, the Group recorded revenue of approximately RMB501.4 million, representing an increase of 18.1% from approximately RMB424.6 million in the same period of the previous year. After deducting the one-time listing expenses of approximately RMB25.6 million, the Group recorded a comprehensive profit of approximately RMB150.8 million from on-going businesses, representing a significant increase of 29.3% as compared with the same period of the previous year.

According to the Frost & Sullivan Report, the number of full-time students enrolled in Shanghai Jian Qiao University increased at a CAGR of 7.6% from the 2015/2016 school year to the 2018/2019 school year, making Shanghai Jian Qiao University the fastest growing university in terms of full-time student enrollment among the top five largest private higher education institutions in the Yangtze River Delta from 2015 to 2018. As at 31 December 2019, the number of fulltime students enrolled in Shanghai Jian Qiao University was 19,857. Meanwhile, according to a report on www.cuaa.net, Shanghai Jian Qiao University ranked the first among private universities in tier-1 cities.

During the Reporting Period, the Group continuously deepened the development of courses, sought more diversified school-industry collaboration and offered students premium market-oriented courses. With the rapid development of the information technology industry across the PRC in recent years, the college of information has also been continuously expanding. The number of students enrolled in the college of gemology was over 1,000, making it the biggest college of gemology across the PRC. Besides, the initial employment rates of graduates from the college in 2018 and 2019 reached 100%. The Group also introduced Go major, making it the only undergraduate major on Go in the whole country and offering professional talents and Go training for the media in reporting professional Go competitions.

Following the development trends of the Lingang New City Area, the Group entered into a strategic framework agreement on comprehensive school-industry collaboration with Shanghai Lingang Economic Development (Group) Co., Ltd. (“Lingang Group”). On such basis, both parties also entered into three secondary collaboration agreements on cooperation in the joint construction of an industrial university, a talent cultivation base and a practice base in the Lingang New City Area to promote all-dimensional, deeper and high-standard opening to the outside. In June 2019, the Group was the only private university in benchmark schools for IT application in education in Shanghai. The premium data connection and multi-dimensional application services were recognized by experts and widely appraised by teachers and students. The construction of an intelligent campus is under progress. Recently, the Group also reached a strategic cooperation agreement with the China Construction Bank (CCB) Shanghai Pudong Branch to establish a long-term strategic partnership with CCB. To further support the Group in achieving its strategic goals, CCB has given comprehensive credit support of RMB 5 billion for merger and acquisition business and daily operations. This will provide strong support for the Group's future domestic and international merger and acquisition plans.

The level of tuition and boarding fees and the number of student enrollment is significant factors affecting profitability. Going forward, the Group plans to review tuition rates on an ongoing basis and adjust them as appropriate. At the same time, the Group intends to continue to increase investments in new construction projects to build academic, administrative, and boarding facilities that can meet the needs of the expansion in the years to come. Phase two of the campus construction plan was put to use at the end of August 2019. This construction project includes a multi-function building with over 10,000 sq.m. of gross floor area specifically designed for the college of gemology, two dormitory buildings with approximately an aggregate of 4,000 beds, etc., which will increase the school capacity and further optimize the pricing of tuition and boarding fees.

The Group intends to pursue suitable opportunities to acquire or invest in additional schools in China to expand the school network and increase the Group’s market share. The Group’s intends to prioritize private higher institutions, the school sponsors of which have elected them to be or intend to elect them to be for-profit schools, in particular universities offering bachelor’s degree programs that are focused on applied sciences. In terms of geographic locations, the Group intends to prioritize suitable target schools in east China, particularly in the Yangtze River Delta, which the Group believes will enhance the profile of the Group and create synergies in this region.

The Group believes the quality of its education services is the foundation of its business. The Group intends to continue expanding and diversifying its course offerings in response to industry trends and market demand. In addition, the Group also has plans to submit an application for its own postgraduate courses in 2020 to further enhance the school’s educational level. The Group also plans to expand the continuing education college. The Group believes that as the demand for continuing education among the employed population continues to increase, the number of part-time student enrollment will also continue to maintain a growth trend.

As Shanghai is one of the most international cities in China, the Group will make full utilization of its favourable location to provide students with more international projects. This will help strengthen the University’s reputation and enhance its overall quality and appeals, and also help the Group optimize professional positioning. In order to accelerate the progress of expansion in overseas, the Group will also consider merger and acquisition of some target schools. The addition of overseas networks can increase the overseas study destination selections for students, and help the Group further attracts overseas students to study at the University.

Looking ahead, Mr. Zhou Xingzeng, the Chairman of the Board and Executive Director of Gench Education, said, “We will make great endeavors to consolidate our leading position in the private education market in Shanghai and the whole Yangtze River Delta. We will enhance our international standards and further improve our reputation and image and attract premium students. Leveraging on the above strategies, we believe that we can continue to expand our business operations and school network and increase our market share. We will seize the historic opportunities in the construction of the Lingang New City Area of China (Shanghai) Pilot Free Trade Zone, speed up in the adjustment of course and specialty layouts and further optimize talent cultivation plans. We will keep a foothold in Lin-gang, integrate into Lin-gang, vigorously advance the integrated development of ‘industries, education and cities’ and strive to build Shanghai Jian Qiao University into a distinctive and multidisciplinary university based on applied sciences and achieve new breakthroughs in the process of building a leading private university in China.”