The company released three quarterly reports for comment in 2023.

In the first three quarters, the company achieved operating income of 9.78 billion yuan, an increase of 5.92% over the same period last year, a net profit of 984 million yuan, an increase of 18.32% over the same period last year, and a net profit of 928 million yuan, an increase of 11.05% over the same period last year.

Among them, in the third quarter, the company realized operating income of 3.747 billion yuan, an increase of 0.53% over the same period last year, an increase of 27.63% over the same period last year; a net profit of 260 million yuan, an increase of 13.30% over the same period last year, a decrease of 32.76%; and a net profit of 279 million yuan, an increase of 14.32% over the same period last year and a decrease of 26.66%.

The main business grew steadily, and the sales growth rate of general books and audio-visual products was eye-catching. During the reporting period, benefiting from the overall recovery of the book retail market and the leading channel service advantages, the company's main business grew steadily in the first three quarters. As of September 30, 2023, the sales of teaching materials in the first three quarters of the company totaled 1.75 billion yuan, an increase of 4.15% over the same period last year, corresponding to an operating income of 1.63 billion yuan, an increase of 3.02% over the same period last year, with a gross profit margin of 25.11%, an increase of 1.48pct over the same period last year. For general books and audio-visual products, sales in the first three quarters increased 34.34% to 4.602 billion yuan compared with the same period last year, corresponding to 3.861 billion yuan in operating income, an increase of 36.06% over the same period last year, and a gross profit margin of 38.57%, an increase of 3.20pct over the same period last year.

Join hands with Huawei to promote the wisdom of the industry and create a universal learning machine for education. Since 2022, the company has carried out in-depth cooperation with Huawei Cloud Technology Co., Ltd. to set up a joint implementation team of "Wanxin-Huawei Cloud" project to promote the development of new retail, smart education and smart supply chain new business type. During the reporting period, the company actively expanded the C-end product line of the Wisdom School through the investor interaction platform and the official account, reached a consensus on Anhui provincial distribution cooperation with Huawei commercial terminals, and joined hands to build an inclusive learning machine for education. is currently in the trial marketing stage. The "Anhui New Learning Machine" jointly launched adopts Kirin eight-core chip, HarmonyOS& intelligent control system one-button switch, and invites front-line teachers of well-known key senior high schools in Anhui Province to record courses, with powerful independent learning function. at the same time, combined with the company's educational service business foundation and supply chain, channel advantages, it is expected to contribute new incremental performance for the company.

The profit margin has increased and the rate of sales expenses has increased. In the first three quarters, the company achieved a gross profit margin of 22.22%, an increase of 3.77pct over the same period last year, and a net profit margin of 10.28%, an increase of 1.05pct over the same period last year.

In terms of expense rate, the company's sales / management / finance / R & D expense rates in the first three quarters were 7.89%, 3.79%, 1.68%, 0.19%, respectively, and the year-on-year changes were 2.82 pct, 0.14pct, and 0.06pct, respectively; during the company period, the expense rate increased by 2.61pct to 10.00%.

[investment advice]

The company has a complete publication distribution service and education service system covering the whole province and surrounding areas of Anhui Province. at the same time, it also continues to strengthen the service capacity of the supply chain, accelerate the construction of an intelligent ecosystem, and promote the steady improvement of performance. Combined with the current operating conditions of the company, we maintain the company's revenue forecast for 2023-2025. It is expected that the company will achieve revenue of 138.28 million yuan in 2023-2025, with a net profit of 9.73 hundred million yuan, 0.4349,0.58 yuan per share and PE times that of 15-14-12, maintaining the "overweight" rating.

[risk Tip]

Macroeconomic downside risk

Industry competition aggravates risks

Risk of technological change