Main points of investment

The company signed a strategic cooperation agreement with Tencent to pay attention to the landing progress of new products in the opening season: on September 8, 2023, the wisdom education special venue of 2023 Tencent Global Digital Ecology Conference was officially held in Shenzhen International Convention and Exhibition Center. Tencent Education officially released the partner star map plan, and signed strategic cooperation agreements with four companies, including Chengdu Jiafa Antai Education Technology Co., Ltd. The cooperation between the company and Tencent will mainly focus on English listening and speaking products. Tencent has a good large model foundation, while the company has rich practical experience in teaching and application scenarios. This cooperation between the two sides is expected to further promote the landing of products in English listening and speaking scenarios and open up a broader space for growth. The company expects to have plans to release new products such as English listening and speaking this year. We advise investors to pay attention to the landing progress of new products in the first school season.

The wisdom education product line continues to expand, and the English listening and speaking product scene is broad: since 2017, the company has continued to enrich the wisdom education product line. By 2023 H1, wisdom education products include smart classrooms, intelligent sports and career education. Among them, the three systems of English listening and speaking product set examination, evaluation and training are jointly built, which can serve English listening and speaking multi-scene. The company is upgrading English listening and speaking products based on the large voice model AI base, and the growth potential is expected.

Jiafa Education is the leading enterprise of educational informatization in China, and standardized test sites contribute the main income. Jiafa Education was founded in 2002 and is the leading enterprise in the national educational examination information industry. since 2017, the company has continued to expand its wisdom education business. at present, it has formed the development situation of wisdom examination + wisdom education two-wheel drive. In 2023, the operating income of H1 company was 305 million yuan, + 23.6% compared with the same period last year, and the net profit was 88.24 million yuan, + 26.1% compared with the same period last year. Educational examination standardized test products and overall solutions H1 income in 2023 was 231 million yuan, + 28.4% compared with the same period last year. Smart education products and overall solutions H1 revenue in 2023 is 49.66 million yuan, + 4.3% compared with the same period last year.

The company is one of the earliest enterprises engaged in the information construction of educational examination in the country, with certain scale advantages and channel advantages: by 2023, the company has participated in the construction of standardized test centers in 31 provinces and more than 200 prefectures and cities. the products cover more than 500,000 classrooms, have obvious scale advantages, and maintain a leading position in the market in the construction of national standardized test sites. The company has nearly 3000 partners in the country, and the sales channel network sinks to every district and county. Large and high-quality channels can help the company to quickly complete the business layout and meet the diversified needs of customers.

Profit forecast and investment rating: the company is one of the earliest companies engaged in educational examination information technology, and has formed its own brand advantage in the industry. English listening and speaking products have broad prospects in the future. we expect the company's 2023-2025 net profit to be 1.6 / 230pm 300 million yuan, the latest closing price corresponding to 2023-2025 PE is 36-25-19 times, the first coverage, given the "buy" rating.

Risk hint: the policy landing is not as expected, and the landing of new product research and development is not as expected as expected.