Oriental Fashion 60% Gross profit margin: rely on what prop up 20 billion of market value

1995, Beijing Daxing District Huang Cun lu rural Wolf FA two village a 7 mu half of the courtyard, the predecessor of the Oriental Fashion School (that is, Jingan Art School, formerly known as "Beijing Oriental fashion motor vehicle Driving schools", after the main assets into the company) quietly opened, that year, the company Mister Xu Xiong 23. "It should be said that we were the last driving school in Beijing, and the facilities and environment might be the worst." "For the shabby facilities, Xu Xiong has admitted in an interview with the media. It can be seen from the prospectus that the company now achieves a gross profit margin of more than 60% per annum. "The current a-share car, car or car advertising services listed company model and Oriental fashion driving industry has a big difference, reference 60% of high gross margin, the company is expected to be listed after the price-to-earnings ratio of more than 30 times times." "Some private-equity figures say. And at 30 times multiples, the Oriental fashion Driving School will have a price of up to 62.7 yuan, the corresponding market value or will be up to 26.334 billion. High gross Profit margin is undoubtedly the key factor to prop up the following market value. The company's operating income is mainly divided into driving service (driver training), sparring services, other business income. Among them, driving service to the main profit sources, data show that 2013, driving service, sparring service contributed to the Oriental Driving School 99.75% of the gross profit, of which the driver service contributed 99.48%. From 2011 to 2013, the gross profit margin of the company's driving service was 65.61%, 65.19% and 63.36% respectively. Backed by high margins, the company Roe (return on equity) is close to 30%. A number of industry insiders in the interview that the Beijing driving training is a more competitive market, not easy to make a lot of money, practice yard fees are very low, oriental fashion school, such high gross margin, net profit margin so high, and its reputation. The reporter learned from the car around the city, in the major driving schools in the capital, Oriental fashion is quite word-of-mouth, whether it is coaches, guidance quality, service standards, bus routes are in the peer competitive. In recent years, the number of students jumped from the side support this conclusion, from 2011 to 2013, the number of Oriental fashion enrollment of 118684 people, 168873 people, 178050 people, in Beijing market share of 19.61%, 19.96% and 23.05% respectively. With the advantage of customer resources, Oriental fashion in the past 3 years to adjust the price of 7 times. During the reporting period, its tuition income was 556.5578 million yuan, 861.6703 million yuan, 976.7999 million yuan, per capita price rose from 4,000 to more than 5,000 yuan. "One is the increase in training content and the extension of training hours", the company explained, "The second is the rise in oil prices." However, in a number of industry insiders see, the Oriental fashion driving high gross profit will continue to the future of the success of its development strategy has a great relationship. "Overall, the company's business model, financial statements are more clear, follow-up valuation is the key to successful off-site replication." If replication succeeds, the annual net profit imaginary space opens。 "There are people in the industry pointing out this. But for the traffic Driving school, the regional is the main basis of customer choice. "The required area of driving school is too large, if the local government can not bring greater profits, it is difficult to obtain administrative support, so the local school driving itself with the local authorities are also very important, which is particularly difficult to open up." Because of this, in the country, have not formed a chain of driving school. Said the driving school industry people to reporters frankly. In addition, the foreign students to the field of the acceptance of driving school is the company will face a major challenge. In this respect, Oriental fashion Driving School also confessed in the prospectus, "Although the company has set up three subsidiaries in other areas outside Beijing, such as Yunnan, Hubei, Hebei, etc., there are regional differences in the driver service business, and there is uncertainty about how the company's brand influence and business model can be replicated rapidly in other areas of the country. "In fact, not only in the field, even in Beijing with the city, along with the further extension of urban development, regional restrictions will be more obvious, in the same quality of service gradually upgrade the background, the advantages of Oriental fashion will be able to maintain how long?" "Driving School industry is the most critical factor is that enrollment by the geographical constraints, take Beijing as an example, even if the oriental fashion has a relatively comprehensive coverage of the shuttle, its enrollment is also affected by the region, basically the students from the company's location Daxing District, and in the north of the diagonal of wangjing and other places, very few people are willing to spend valuable time on the bus route, Especially in recent years, many driving schools to reform, the overall quality of service has improved, Oriental fashion word-of-mouth advantage is gradually shortened. "Another Beijing driving school industry Personage said to the reporter.