Author | Bugle X
Edit | See you for the first time
In late June, if nothing unexpected happens, the bell of AOL Education will ring soon. On May 22, MEDU. N, the second largest offline English training institution in China, officially submitted the F-1 document of listing application to the US Securities and Exchange Commission, planning to raise $100 million. Citigroup, CICC and Macquarie Capital are the co sponsors.
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Four major businesses, adult English accounts for 60%
Founded in 2006, Meilian English, headquartered in Shenzhen, focuses on adult English training, starting with small offline classes of one-to-four and one-to-ten. By the end of fiscal year 2018, Meilian English had 136 offline learning centers in 32 cities in China (including 120 self operated centers and 26 franchise centers), with 118000 participants and 18000 teachers+consultants.
In 2012, Meilian English set up the Overseas Study Examination Department, which has successively merged Beijing Houde Study Abroad (upgraded to Meilian Study Abroad), Taiqi Education, Lewen Tuer (teamed up to Meilian Study Abroad Examination), and become an important player in the domestic study abroad service track.
In 2014, the online English learning platform of Meilian English immediately said that it would provide live online English courses. As of the first quarter of 2019, immediately said 830000 registered users and 160000 paid users. In June 2018, Meilian English acquired ABC Education Group (ABC Foreign Language), expanding to K12 youth English.
By the first quarter of 2019, ABC Foreign Language had 24 self operated learning centers in Beijing, Nanchang and Foshan, with 2400 students enrolled.
According to the prospectus, in the 2016-18 fiscal year, Amtrak English recorded receivables of 800 million yuan (RMB, the same below), 1.15 billion yuan and 1.42 billion yuan respectively, and the corresponding net profits were - 27.15 million yuan, 40.3 million yuan and 53.45 million yuan respectively. In the first quarter of 2019, Meilian English recorded a revenue of 315 million yuan and a loss of 42 million yuan.
In the four business segments of adult English, overseas study service, online English and youth English, adult English occupies an absolute share, accounting for 63.5% of the revenue in fiscal 2018. After completing three mergers and acquisitions in succession, the study abroad service became the second largest business segment of American Union English, accounting for 15.17% of the revenue in fiscal 2018.
It is worth noting that in the first quarter of 2019, the proportion of online English revenue rose from 14.9% in fiscal 2018 to 16.5%, replacing the study abroad service as the second largest business segment of American Union English.
The prospectus pointed out that for the planned $100 million of raised funds, the main investment direction is not only M&A and new offline learning centers, but also continuous investment in online English and youth English (accounting for 4.6% of the revenue in fiscal 2018).
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Continuous entrepreneurship, starting to clone "Wall Street English"
Since its inception, American United English has completed five rounds of financing, with the latest round of financing valued at 4.2 billion yuan. In 2012, the personal investment Yun Feng contributed 20 million yuan, accounting for 6% of the shares, with a valuation of 330 million yuan, which was the first round of financing of American Union English.
In 2015, Dachen Venture Capital invested 20 million yuan in two separate investments, obtained 2% of the equity, and completed the A-round financing of American Union English. In July 2016, Doug Capital teamed up with two SME development funds to invest 170 million yuan in Wachovia English, which was then valued at 1.8 billion yuan.
In January 2019, Midland English completed a pre IPO round of financing of 330 million yuan, led by Doug Capital, followed by Muhua Capital and CICC Capital under Tsinghua Holdings.
Zhao Jishuang, Chairman of Meilian English
After five rounds of financing, the chairman of American Union English Zhao Jishuang It holds 29.05% of shares and is the largest shareholder. Doug Capital is the second largest shareholder with a total shareholding of 15.13% through two entities. Peng Siguang, Executive Director and CEO of American Union English, and Guo Yupeng, Executive Director and Vice President, 14.68% and 13.91%, respectively, are the third and fourth largest shareholders.
Zhao Jishuang, who has three entrepreneurial experiences, graduated from foreign trade. He was a layman in English teaching. At the initial stage, American United English basically "cloned" Wall Street International English. With the marketing skills of Chinese people, he gradually gained a foothold in the English market.
Marketing is the gene of American Union English. In fiscal year 2018, the marketing expenses of American Union English reached 425 million yuan, while the R&D expenses were just 29 million yuan.
In addition to Meilian English, Zhao Jishuang also established a fragmented mobile English learning platform - Shuangge English in January 2015, and obtained tens of millions of yuan of shared capital investment at the initial stage.
In March 2015, Zhao Jishuang's Meilian International Education Group, together with Greenville High School and University of Missouri K12 Online High School, set up a "pure American" education Meilian International High School in Chengdu, which adopts the 2+1 study abroad model (that is, two years at home and one year abroad).
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Crazy installment, 40% of students rely on loans for classes
Meilian English started in South China and gradually expanded to the Southwest and East China. The number of participants in Shenzhen, Guangzhou, Dongguan, Guangdong, Chengdu, Sichuan, Nanjing, Jiangsu and Suzhou accounted for 57.6%. For the further expansion of adult English, the primary target is Beijing, Shanghai, and then the second and third tier cities.
In the first tier cities, the main competitors of American Union English are Wall Street English, EF Education and Webb English.
Marketers pointed out that in the process of rapid expansion, American Union English faces two major compliance risks: first, most self operated learning centers fail to obtain the necessary school running licenses, which is "unlicensed driving"; Second, most foreign teachers failed to obtain work visas and residence permits.
On the other hand, American Union English is positioned as "high-end", and the tuition is expensive. There are seven levels in total, and the entry level has reached 10000 yuan. In order to solve the "high threshold" problem of tuition fees, Meilian English has cooperated with DuXiaoMan (formerly Baidu Finance) and Meilai to provide interest free installment service for students.
For example, the English installment product I came to loan and speak immediately is online tutoring for one to four small classes of foreign teachers, which is divided into two forms: half year card and annual card. Students can enjoy up to 12 full interest free installments.
The prospectus shows that in fiscal 2018, 43.5% of the students of American Union English used various forms of installment loans, which brought 42.2% of American Union English's gross income. Of course, installment loans are more likely to cause dropout problems. In fiscal year 2018, the dropout rate of Meilian English was 10.2%, and a refund of 37.8 million yuan occurred. Among them, the dropout rate of students with installment loans was 13.2%, higher than the average level.
In terms of customer acquisition and marketing, Meilian English, which is moving towards online education, is also facing huge challenges. In 2016-18, the number of participants in American Union English increased by 112%, and the marketing expenses in the same period reached 269 million yuan, 373 million yuan and 425 million yuan respectively.
In terms of marketing mode, American League English adopts offline and online integration: offline, it has established 182 sales points nationwide, and immediately established 5 offline experience stores; Online: establish a dedicated online marketing team to conduct precise marketing through search engines and social platforms.
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Can the valuation of 4.2 billion yuan support the turbulence of US stocks?
In addition to offline and online integration in marketing, offline and online integration in product level forms a closed loop in English learning, which is also the development idea of Meilian English.
In the layout of Meilian English, offline small classes are the basis to provide students with systematic basic knowledge learning, while online learning platform is "advanced" to provide more rich and diverse learning scenarios and resources. Both offline and online work together to "bring faster progress to students".
Under the guidance of offline and online integration strategies, AOL vigorously expanded online teacher resources, and immediately said that the platform had 16000 registered teachers, including 6900 foreign teachers. Since 2014, the cumulative number of participants immediately mentioned is 98000. In 2018, it recorded an operating revenue of 212 million yuan, basically doubling.
According to Sullivan's data, ELT (English Language Teaching) in China has increased from 16.8 billion yuan in 2013 to 47.9 billion yuan in 2018, with a compound annual growth rate of 26.3%, and is expected to reach 154 billion yuan in 2023. Among them, online English increased from 6.4 billion yuan in 2013 to 37 billion yuan in 2018, with a compound annual growth rate of 42%. Of course, offline English is still the mainstream of the market, accounting for 74.1%.
In the fast growing English track, American League English has arranged offline and online, trying to eat the fast growing dividends. However, at a time when the US stock market is in turmoil and domestic education companies listed in the US are breaking, it remains to be tested by the market whether American Union English can sustain the overvaluation of 4.2 billion yuan.