Event: the company released its semi-annual report for 2022: 2022H1, the company achieved a business income of 120 million yuan, an increase of 26.8% over the same period last year, and a net profit of 7.503 million yuan, compared with-356000 yuan in the first half of 2021. In a single quarter, 2022Q2 achieved an operating income of 55.869 million yuan, an increase of 39.0% over the same period last year, and a net profit of 931000, an increase of 68.1% over the same period last year.

The company's cornerstone business growth is obvious, product research and development and promotion go hand in hand. Teaching auxiliary books, as the cornerstone business and main source of income of the company, achieved revenue of 95.851 million yuan in the first half of 2022, an increase of 27.8% over the same period last year, and a gross profit margin of 33.1%, an increase of 8.28% over the same period last year. The business of teaching auxiliary books has achieved good growth, mainly due to the good growth of catalogue products. In terms of product promotion, the company added more than 200 kinds of evaluation catalogue products in Shaanxi, Guizhou, Zhejiang and other provinces in the first half of the year, and promoted the company's products through the "Partnership Program" to explore new marketing models and provide important support for sales revenue growth. In terms of product research and development, the company planned, edited and produced 1780 books in the first half of the year, and made every effort to create the leading product of high school general review, "College entrance examination General Review and optimize Design". And new research and development of "reading in the morning and practicing English in the evening" series of products, "junior and senior high school bridging textbooks" of biology, politics and some local special edition products, at the same time, the company insists on "going out, please come in" and establish a stable cooperation mechanism with external experts. Introduce excellent chief editors to ensure the improvement of content quality.

AI education continues to advance, which is the key distribution direction of funds. In the context of the "double reduction policy", the company promotes the upgrading of the company from a teaching auxiliary book publisher to a comprehensive education service provider through independent research and development and the integration of resources. In the educational AI business, the company actively promotes the digital transformation and upgrading of educational content, focusing on the research and development of accurate teaching products with independent intellectual property rights, which have deeply covered students' daily assignments, examinations and other teaching scenes, and have been tried out in Sichuan, Shandong, Henan and other places, serving more than 40 schools and nearly 10,000 students. At the same time, the company increases capital investment in wisdom education, and the company successfully completed refinancing in March this year, raising a total of 244 million yuan, all of which will be used for educational content AI system construction projects, providing sufficient resources for the company's precision teaching business development. In April this year, the company invested 30 million yuan in cash to increase the capital of Micro Oak Technology and held a 26.1% equity stake in Micro Oak Technology. This strategic investment will help the company to make more in-depth exploration in the field of intelligent education and expand the precision teaching business on campus. Accelerate the expansion of the market layout.

Profit forecast and investment advice: it is estimated that the EPS of the company in 22-24 years is 0.21 yuan / 0.24 yuan / 0.27 yuan respectively, and the corresponding PE is 36-31-28 times respectively. As the leader of private publishing, the layout education AI is expected to further open up the growth space, with a net profit of 18.8% in the next three years, maintaining a "hold" rating.

Risk hints: the double reduction policy brings the risk of uncertain demand for education; the risk that the R & D and sales progress of education AI system is not as expected; the risk of deterioration of market competition.