2020H1 revenue/adjusted net profit increased by 10.2%/6.8%, and a proposed interim dividend of HK$0.06 per share is proposed. The company's 2020 H1 revenue increased by 10.2% to 326 million yuan, net profit increased by 38.4% to 46.32 million yuan, and adjusted net profit increased by 6.8% to 64.28 million yuan. The gross margin of 2020H1 companies also fell 5.7 pcTS to 37.5%, mainly due to the relatively limited revenue of the new learning center and the additional expenses generated by using the ClassIn platform for online classes during the pandemic; the sales/management expense ratio also fell 0.4/3.6pcTS to 1.8%/17.9%, mainly due to a decrease in marketing activities and listing expenses in the same period in 2019; and the R&D expenses rate also increased by 0.9 pcTS to 6.3%, mainly due to the increase in the number of R&D personnel. Overall, the adjusted net interest rate of 2020H1 also fell 0.6pcTS to 19.7%. Against the backdrop of the pandemic, growth has bucked the trend, and the number of summer experiential courses has increased rapidly. Against the backdrop of the K12 offline curriculum training industry being significantly impacted by the epidemic, the company quickly transferred students to online and used “original teachers, original students, original courses” to teach, and the business situation bucked the trend. The number of students enrolled in 2020H1 companies also increased by 7.1% to 123,800, and the number of tutoring hours increased by 5.1% to 3.8937 million. In terms of network layout, the company's learning centers increased from 100 at the end of 2019 to 127, and has also newly entered the Guangzhou and Shantou markets, opened 2 learning centers in Guangzhou, and launched the Thinking Music Online School in Shantou. All of the company's learning centers fully resumed offline classes in June. The number of students enrolled in the 2020 Summer Experience Program increased by 91.4%, and cities outside Shenzhen increased by 215.0% year on year, laying a solid foundation for subsequent development. Establish a high-end Hongmeng class to create a diversified brand structure. The company officially established the high-end brand Hongmeng High-end Class in May 2020, bringing together outstanding teachers to create a high-end teaching system for excellent students. The launch of the Hongmeng Premium Class is conducive to building a brand effect for the company, targeting more of the target group to top students, and forming a positive cycle of students and word of mouth. In addition, the company expects to invest in multiple product lines to increase the proportion of 1 to 1 to 1 to 3 tutoring and training, and more fully increase the usage rate of the company's existing learning centers. In terms of online business, Thought Online School is piloting in Shantou, and the Double Teacher Classroom continues to gain strength in second- and third-tier cities; in addition, the company is accelerating the promotion of the OMO model to provide students with integrated online and offline teaching services. Continue to invest in R&D and teacher recruitment and training to enhance cross-regional operation and management capabilities. While deepening the Greater Bay Area market, the company is expected to expand the Jiangsu and Zhejiang markets in the future. In order to support cross-regional development, the company continues to invest in R&D. Thinking Le Research Institute has more than 200 professional teachers and researchers. Ensure standardization of textbooks, teaching processes, and quality during the company's channel expansion process. The company reached a strategic cooperation with Oracle in May 2020, using Oracle's advanced IT technology and data analysis platform for the company's teaching management, expanding the management radius in multi-city operations. Currently, the company has more than 4,000 employees. The company continues to train excellent teachers through the construction of the Luohu base and the Huizhou talent training base to ensure the supply of teachers during the expansion of the company's channels. Investment advice. As a rapidly developing K12 extracurricular training company in South China, the company is deeply involved in the market through refined services and operations and a mature teaching and research system. It is expected that it will continue to expand its business map and achieve further share growth. 2020H1 has experienced contrarian growth in the context of the pandemic. Based on the growth momentum brought by the company's current summer customer acquisition situation, it maintained its 2020 net profit forecast of 166 million yuan, raised the 2021/2022 net profit forecast to 233/316 million yuan (originally 2.07/249 million yuan), an increase of 74.8%/40.8%/35.5%, corresponding to EPS 0.30/0.42/0.57 yuan, and the current price corresponding to PE59X/42X/31X, maintaining the “increase in holdings” rating. Risk warning: risk of recurrence of the epidemic; profitability falling short of expectations during expansion; risk of expanding new teaching models; tightening of regulatory policies; increased competition in the industry.