BEDU is the largest operator of international and bilingual K-12 schools in China in terms of student enrollment, as of September 1, 2016. In the first half of the 2017 school year, it had an average of 29,230 students enrolled at its schools, representing an increase of 54.6% from an average of 18,913 students enrolled during the 2014 school year. As of February 28, 2017, it operated 51 schools.
Its schools comprise international schools, bilingual schools and kindergartens. It offers a broad range of internationally-accredited curricula in its international schools. Also, it complements its international offerings with Chinese government-mandated curriculum for students who wish to maintain the option of pursuing higher education in China.
Its bilingual schools place a specific emphasis on developing its students’ English language proficiency and non-academic skillsets, offering elective classes in sports, arts and community service programs. Its kindergartens seek to lay the necessary foundation for students’ future studies. BEDU also offers a range of complementary education services, including overseas camps and after-school programs.
BEDU collaborates closely with Country Garden, which is a leading developer of residential properties in China, which has allowed it to operate a scalable business model and launch greenfield schools with significantly lower upfront capital expenditures. Substantially all of its existing schools were developed in cooperation with Country Garden’s residential property projects, allowing Country Garden to meet local government requirements and the market needs for education facilities and services in its residential communities.
Its growth strategy includes expanding into new markets in China, broadening its offerings, and increasing the utilization rate and improving its operating efficiency.
Taking a look at the financials, revenue increased 28% year/year for the six months ended February 29, 2016 to RMB646.2 million. The increase is primarily due to a 15.2% increase in the average number of students from 5,440 to 6,268, and a 2.1% increase in the average tuition and fees from RMB39,412 to RMB40,235 during the same period. Gross margin increased from 27.1% primarily due to its improved operating efficiency and the increased average tuition and fees.
Since the beginning of the 2016 fiscal year, it has implemented various initiatives to improve operating efficiency and profitability, including from budget control, improvement of teacher productivity and allocation of experienced teachers from mature schools to newer schools across the school network, resulting in the increase of the student-to-teacher ratio in the schools from 9.0 to 9.5 for 1H16 and 2017 school years, respectively.
As a result of the above, BEDU reported operating income of RMB109.7 million in the period compared to a loss of RMB45.3 million in the year ago period.