Event: the company released a third-quarter report, 23Q3, the company achieved an income of 204 million yuan, an increase of 2.4%, a net profit of 41.87 million yuan, an increase of 58.2%, and a net profit of 424.8 billion yuan, an increase of 61.0%. In the first three quarters of 23, the company achieved an income of 561 million yuan, a decrease of 4.8%, a net profit of 99.55 million yuan, an increase of 87.7%, and a net profit of 99.95 million yuan, an increase of 88.0%.

Comments:

Q3 has a high performance growth. After the optimization of epidemic prevention policy, vocational education business has shown a good repair flexibility, and the number of students in school has gradually recovered, leading to the release of performance. 22 the closure of K12's extracurricular training business at the end of the year affected the apparent growth of income, but had little impact on the profit end, and 23Q3's homed net profit increased by 58 per cent.

Gross profit margin increased year-on-year. 23Q3, gross profit margin 40.9%, with the same increase in 0.7pct, profitability is further improved.

The rate of expenses fell sharply during the period. 23Q3, the sales expense rate was 5.8%, a sharp decrease of 5.6% compared with the same period last year; the management expense rate was 6.5%, down 3.1 PCT from the same period last year; the R & D expense rate was 2.8%, up 1.0 PCT from the same period last year; and the financial expense rate was 0.4%, an increase in 2.4pct over the same period last year. The significant decrease in the rate of sales expenses and management expenses is mainly due to the closure of K12 extracurricular training business.

Net interest rates have picked up sharply. 23Q3, realized a net profit of 41.87 million yuan, an increase of 58.2%, and a net profit of 424.8 billion yuan after deducting non-profit, an increase of 61.0%. Profitability was significantly repaired, with net interest rates rising 6.9pct to 19.8 per cent year-on-year.

Investment advice: Q3 high performance growth, showing good repair flexibility, re-study and vocational school business enrollment gradually resume, contribute a solid basic plate, the future AI courses are expected to contribute increment. In 2023-25, we maintain the EPS of 0.39, 0.50 and 0.64 yuan, and the current share price of 24x/19x/15x, corresponding to PE, and maintain the "buy" rating.

Risk tips: the number of enrollment is not up to expectations, resulting in the company's revenue and profits do not meet expectations; macroeconomic downside risks; key business personnel mobility risk.