ChinaEdu Corporation (Nasdaq: CEDU) Leading Education Services Provider in China

Transcription

1 ChinaEdu Corporation (Nasdaq: CEDU) Leading Education Services Provider in China September 2008

2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Forwardlooking statements involve known and unknown risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company s actual results could differ materially from those contained in the forwardlooking statements due to a number of factors, including those described under the heading Risk Factors in the Company s final prospectus filed with the Securities and Exchange Commission on December 11, 2007, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 1

3 Introduction

4 Company Overview ChinaEdu is a leading education services provider in China Largest service provider to the online degree education market in China Unique and proven business model: Comprehensive services to toptier universities in China through exclusive long-term partnerships Exceeded 230,000 total revenue students (includes all business segments) Strong revenue growth since inception (42% revenue CAGR between 2003 to 2007) Established proprietary service and technology platform developed and refined over the past eight years 3

5 ChinaEdu's Strong Management Team Highly experienced with both Sino US backgrounds Years with Management Position Background Company Julia Huang Chairman CEO Senior Manager, Ernst & Young (NY) MBA, Columbia Business School 7 Shawn Ding President COO Director CTO, Infostream Software MA, New Jersey Institute of Technology 6 Zonglian Gu GM, CMR Web Dean, Renmin Online Director Professor of Renmin University BA, Renmin University 6 Wen Liu VP Technology Deputy General Manager, Beijing MoVision Technologies Director, China SciTech Business of Henderson Holdings 2 4

6 Business Segments: Online and Site-Based Online education programs currently represent over 80% of revenue Online Delivery Online Degree Program Services 81.9% of 2Q08 Revenue Online Tutoring and Test Preparation Programs 5.1% of 2Q08 Revenue Site-Based Delivery International Curriculum Programs 8.3% of 2Q08 Revenue Private Primary and Secondary Schools 4.7% of 2Q08 Revenue Note: Three months ending June 30,

7 Investment Highlights Scalable Business Model Online education model drives margin expansion (online degree business gross margin improved from 62.3% in 2004 to 71.3% in 2007 and 75.8% for first half 2008) Capture Industry Growth Opportunities Expand learning center network to provide vertical integration, drive student enrollment, improve margins and attract new university partners Leading Market Position High barriers to entry Exclusive partnerships of 15 to 50 years with ten top-tier universities Signed 8 new strategic partnerships, bringing a total of 20 university partnerships Proven Track Record Well-established, strong brand name SUCCESS Robust Revenue Growth Consistent top-line growth: 42% CAGR from Early Stage and High Growth Industry Favorable macroeconomic and industry trends 6

8 History and Milestones Fast Growing Education Company Total Enrollment 220,000 Signed Agreement to form JV with Beijing Forestry University NASDAQ IPO Formed JV with Shanghai University of Finance & Economics Signed service agreement with Lanzhou University 170, ,000 70,000 20,000 Signed an agreement with Southern Yangtze University Entrance exam for first batch of registered applicants Company founded Received approval from MOE to operate learning center network Signed an agreement with Anqing No.4 School to own and operate Anqing Foreign Language School Formed JV with Central University of Finance and Economics Formed JV with Beijing Language and Culture University Signed a contract with Jinzhou High School to own and operate the school Acquired FEC International Program Signed an agreement with China Agriculture University Signed an agreement with East China University of Science and Technology Education platform beta-testing completed Acquired BCIT Program Acquired Wellent Education Company to enter into K-12 private school sector Signed service agreement with Nanjing University Formed JV with Chongqing University Formed JV with Dongbei University of Finance and Economics Signed an agreement with Renmin University

9 Vast Growth Potential in Chinese Education Market Population creates the world s largest education market China s economic growth is driving demand for higher education Integration into global economy leads to increased demand for skilled labor Emphasis on higher education and English proficiency Income potential drives demand for degrees College graduates earn 2x that of high school graduates Education spending projected to reach $242 billion by 2010 (approx. 3x current levels) 50% of college applicants denied acceptance to colleges annually due to capacity constraints Rapid growth in private educational services Online education is becoming the primary vehicle for adult education 8

10 Growth Strategy and Performance

11 Core Business Growth Strategy Building online degree programs through organic growth Secure new university partners Increase enrollment at existing schools Aggressively expand learning center network 10

12 Online Degree Programs Exclusive Partnerships with Top-Tier Universities Exclusive partnerships with top educators in China Long-term partnerships of years set high barrier to entry Beijing Forestry University (1) Beijing Language and Culture University Renmin University of China China Agricultural University Central University of Finance & Economics (1) Lanzhou University Chongqing University Lanzhou Chongqing Beijing Liaoning Dalian Nanjing Shanghai Wuxi Guangxi Taiwan Macao Hong Kong Dongbei University of Finance and Economics Nanjing University Shanghai University of Finance and Economics (1) Jiangnan University East China University of Science and Technology Key Concentrations Offered Accounting Business Administration Civil Engineering Computer Sciences Economics English Finance Forestry International Trade Law Literature (1) Waiting for approval from the MOE to operate online degree program. 11

13 Online Degree Programs Strong Growth in Enrollment and Revenue Only comprehensive outsourced service provider Proven win-win business model True partnership with Universities Successful track record and strong pipeline Formed 12 partnerships in 10 years Robust student enrollment growth driven by new university partnerships and increased enrollments at existing schools Total revenue student enrollment of approximately 192,000 in , , , ,000 50, ,000 No. of Online Degree Revenue Students CAGR = 42% 64,000 83, , , No. of Universities (with online program approved) 12

14 Online Degree Programs Comprehensive Service Offering Offer comprehensive one-stop-shop service to universities Provide unparalleled technology and service platform Student Learning Center Online Degree University University Selection Degree and Course Offerings Entrance Exams Registration and Enrollment Payment Processing Student Services Course Exams Enrollment Marketing Learning Management Systems Courseware Development Academic Service Student Administration Sponsorship Confers Degrees Market Size: 3 For-Profit Operators 2,200 Learning Centers 1.8 million students (1) 67 Online Degree Programs (1) ChinaEdu Market Share: 1 of 3 licensed operators nationwide Approx. 230,000 students 9 Online Degree Programs (2) (1) Excluding CRTVU University correspondent students. (2) Only refers to approved online degree programs. 13

15 Vertically Integrated Online Degree Program Value Chain Expanding learning centers which serve as recruitment and testing centers Online Degree Programs Learning Center Students Learning Center Learning Center University Online Degree Services Tuition fees: University fees: Learning center fees: Service fees: Students pay tuition to a university for an online degree program University retains approximately 10% of tuition as administrative fees University pays approximately 30%-60% of tuition dollars to a learning center for recruitment, proctored testing and other services University pays ChinaEdu a service fee which ranges from approximately 30%-60% of total student tuition for its online degree and technology platform 14

16 Learning Center Network Provides Strategic Growth Opportunity Vertical integration opportunity adds strategic value Learning centers on average capture approximately 30% to 60% of tuition dollars Personal attention to students improves service quality and retention More effective marketing efforts to drive enrollment Enhance brand and attract new partners Expanding learning center network 10 wholly owned learning centers in four provinces and cities One of three companies with MOE approval to operate learning centers in multiple provinces 10 fully operational centers in Beijing, Shanghai, Jiangsu and Zhejiang as of the end of June franchised learning centers Obtained provincial level approval to expand the network Project 50 to 60 franchised learning centers will be operational by end of

17 Online Tutoring and Test Prep: 101 Online School Market dynamics Highly fragmented, severely underserved, few regulatory constraints, consumer oriented One child policy is increasing educational spending per child Established brand and platform 101 Online is a leading online K-12 after school program with >10 years of brand recognition Comprehensive online tutoring, self study and test preparation service provider Significant opportunity to be the dominant player Clear initiatives to grow business Continuously update product Enhance 101 website to improve customer experience Strengthen marketing efforts Campaigns to enhance brand awareness and generate more sales leads Realign sales force and customer service operations Increase effectiveness and efficiency Improve consumer recognition and student services to attract and retain more students Emphasis on post-sales services to improve recurring revenue dynamics 16

18 Emerging Business Segments: Site-based Programs Anqing Jingzhou Pingdingshan International Curriculum Programs FEC Programs: Provides secondary schools with high-quality English instructional programs BCIT Programs: Provides international post-secondary curriculums to selected polytechnic colleges Growth strategy Increase penetration by forming more international school partnerships Explore strategic relationships with overseas curriculum providers Private Primary and Secondary Schools Two highly respected private schools in operation: Anqing, Pingdingshan Jingzhou High School under construction Growth strategy: Establish high-quality private schools to meet growing market demand and capitalize on increasing educational spending Expand capacity and range of grade levels Increase enrollment across the board 17

19 Successfully Capitalizing on Market Trends; Continuous Top-Line Growth Driven by Online Degree Programs Net Revenue RMB m Continued Strong Revenue Growth RMB m ,000 83, , , , , Q07 2Q Q07 2Q08 Online Degree Program Revenue 250, , , ,000 50,000 0 Robust year-over-year top-line growth Revenue CAGR of 42% between 2003 to 2007 Growth primarily driven by significant growth in online degree programs Online degree program revenue doubled from 2004 to 2007, growing to RMB million in 2007 Student enrollment tripled during the same period to 192,000 at end of 2007 Online Degree Program Revenue No. of Online Degree Students 18

20 Online Degree Business Gaining Momentum Diverse Revenue Mix to Drive Continued Growth 2Q08 Revenue Breakdown 81.9% 2Q07 Revenue Breakdown 76.4% 5.1% 8.3% 4.7% 8.0% 10.6% 5.0% Online Degree Private School Online Degree Private School International Curriculum Online Tutoring International Curriculum Online Tutoring Revenue contribution from online degree programs increased to 81.9% in 2Q08 from 76.4% in 2Q07, driven by strong market demand and student enrollment growth Note: Period ending June 30,

21 Continued Expansion of Gross Margin Strong Gross Margin Development 90% 80% 70% 60% 62.3% 62.3% 60.7% 57.9% 67.3% 62.4% 71.3% 63.6% 75.6% 68.9% 79.3% 70.6% 50% 40% 30% 20% 10% 0% Q07 2Q08 Gross Margin for Online Degree Program Gross Margin Consistently increasing gross margins amid inflationary environment Scalable business model enables margin expansion Total gross margin of 70.6% in 2Q08 vs. 68.9% in 2Q07 Gross margin for online degree programs increased to 79.3% in 2Q08 vs. 75.6% in 2Q07 20

22 and Strong EBITDA Performance EBITDA is a key indicator for education companies (in thousands) Six Months Ended June 30, 2007 RMB June 30, 2008 RMB June 30, 2008 USD Net Income 12,474 11,274 1,643 EBITDA 41,753 46,152 6,728 Adjusted EBITDA 43,068 48,206 7,027 EBITDA (non-gaap) increased by 10.9% Adjusted EBITDA (non-gaap) increased by 11.9% (*) Definition of EBITDA: earnings before interest, taxes, depreciation, amortization and minority interest. (**) Definition of adjusted EBITDA: earnings before interest, taxes, depreciation, amortization, share-based compensation and minority interest. 21

23 Solid Balance Sheet (in thousands) June 30, 2008 RMB June 30, 2008 US$ Cash and cash equivalents 400,737 58,424 Accounts receivable, net 13,722 2,001 Term deposit 33,000 4,811 Amounts due from related parties 168,610 24,582 Total current assets 634,498 92,505 Deferred revenues 80,963 11,804 Total current liability 197,199 28,750 Long term debt 23,568 3,436 22

24 Thank You