23H1 loss narrowed compared with the same period last year, continue to consolidate the school operation ability, and vigorously expand quality and vocational education.

Kevin Education issued a half-year performance forecast for 2023. It is estimated that the net loss attributed to shareholders of listed companies is 20 million yuan to 23 million yuan, which is 57.63% lower than the same period last year. 63.16%; deducting non-net loss is 21 million yuan to 24 million yuan, narrowing 62.07% compared with the same period last year. The narrowing of losses is mainly due to the fact that the operating capacity of the company has gradually returned to normal after the company completed the relevant procedures for the change of school organizers. The company has a clear strategy and will continue to expand the business scale of vocational education while continuing to consolidate school operation and service capacity and explore the market potential of quality education and training. We expect the company's 23-25 revenue to be 3.49x4.24 / 505 million yuan and BPS to be 3.77plus 3.85Company3.97. with reference to the average consistent forecast of comparable company Wind, the company will be given 1.27x 23e PB with a target price of 4.78yuan (previous value 4.52yuan), maintaining the "hold" rating.

After the completion of the transformation, the income and profit are gradually repaired.

According to the announcement, the year-on-year growth of the company's operating income and net profit is mainly due to the completion of the procedures related to the change of school organizers at the end of March 2022, the stable development of school activities and the return of the company's operating capacity to normal. On April 28, the official account of Chaoyang Kevin School announced that it will start a high-quality high school program with the domestic college entrance examination as the direction of further study in the autumn of 2023, which is expected to increase the company's school operation service income.

Taking advantage of the east wind of the policy of industry-education integration, the profit model of vocational education has gradually become clear. On June 8, the National Development and Reform Commission and other departments issued the "implementation Plan for the Enhancement Action of Industry-Education Integration of Vocational Education (2023Mew 2025)". It is required to improve the implementation of a combined incentive and empowerment policy system and speed up the training and construction of industry-education integrated enterprises. According to the announcement, the company has established industrial colleges in cooperation with six universities in Shandong, Henan and other places, and has signed strategic cooperation relations with applied undergraduate private colleges such as Beijing City College and Zhengzhou Shengda Institute of Economic and Trade Management, which has laid a solid foundation for follow-up project cooperation. The main profit models of the company's vocational education include the co-construction of industrial colleges, vocational training and further studies, induction of production, and so on. With the improvement of the scale of cooperation in running schools, the company is expected to tap more space and potential for business development.

Target price 4.78 yuan, maintain the "hold" rating

In view of the gradual clarity of the company's vocational education profit model and the continuous expansion of industry-education integration cooperative schools, we have added wisdom education, university education and science and technology education as comparable companies that are also expanding the business of industry-education integration. Referring to the average consensus forecast of comparable company Wind, we give 1.27x 23e PB with a target price of 4.78 yuan (the previous value is 4.52 yuan) and maintain the "hold" rating.

Risk tips: the number of vocational education enrollment is not as expected; the epidemic repeatedly blocked offline teaching activities; teachers and core management personnel lack or loss risk; real estate rental rate is lower than expected.