The company built a comprehensive platform for internships and training for the core business of vocational education, expanding horizontally from rail transit majors. Born in rail transit, he built a multi-industry vocational education internship training equipment platform. The field of safe operation simulation training continues to expand, and ship and equipment simulation products are developing rapidly. In 2022, the company's first three quarters were affected by the epidemic and flood conditions, and the original tender project was delayed or cancelled; the overall growth rate of the rail transit training equipment market capacity slowed down, college bidding projects lagged behind previous years, and the financial funding progress of major customer groups was also affected to a certain extent.
The company's annual performance improved, thanks to interest rate discounts+vocational education policies, which stimulated the growth of the company's business orders.
VR and vocational education policies are favorable, promoting the steady development of the industry. 1) The VR market is sizable. According to IDC data, China's AR/VR market maintained rapid growth with a compound annual growth rate of 42.2% in 2021-2026.
2) Favorable policies to help the VR industry develop rapidly. 3) VR is widely used in the field of education. VR was connected to the field of education earlier and has been widely used. It has been applied to primary and secondary education, vocational education, higher education, etc. 4) Vocational education policies are frequent, which favors enterprises integrating maternity and education. In September '22, the Ministry of Education issued the “Notice on Matters Relating to Expanding Investment in the Field of Education”. In principle, each university or vocational college is required to apply for 1 project, and each declared loan should not be less than 20 million yuan. In October, the “Opinions on Strengthening the Team Building of Highly Skilled Talents in the New Era” pointed out that by the end of the “14th Five-Year Plan” period, the system policy for highly skilled talents was more complete and the training system was more complete. 5) Rail transit is developing rapidly, and demand for simulation training systems is expected to increase.
6) There are certain technical barriers to rail crossing simulation training, and a market competition pattern has already been formed.
Having been deeply involved in the field of virtual simulation for many years, they have continued to benefit in the context of the AIGC wave. 1) The company has been deeply involved in the field of virtual simulation for many years to form a complete business plan. Focus on R&D investment and stay ahead of the curve. The company focuses on R&D innovation and continuously increases investment and personnel. 2) The company supports various skill contests to continuously enhance its influence in the industry. 4) Following the AIGC wave, ChatGPT-like technology enables practical training and interaction, and the company may benefit in the context of AIGC. 5) Actively carry out international exchanges to promote the process of internationalization of railway vocational education.
Profit forecast: We expect the company's revenue for 23-25 to be 422, 548, and 700 million yuan respectively. Under the valuation method, we gave the company a target price of 28.39 yuan in '23, covering it for the first time, and giving it a “buy” rating.
Risk warning: receivables recovery risk; increased industry competition; risk of seasonal fluctuations in income.