23Q3 revenue of 130 million yuan increased 26%, net profit of 0.3 billion yuan increased 41%, 23Q3 revenue of 130 million yuan increased 26% (Q1 decreased 26%, Q2 increased 53%), and 23Q1-3 revenue of 440 million yuan increased 24%.

In 23Q3, net profit of $0.3 billion increased by 41% (Q1 decreased by 77%, Q2 increased by 55%); net profit of 23Q1-3 was increased by 29% at the same time of $120 million.

23Q3 gross profit margin increased by 50.9% by 11pct, net profit margin increased by 21.2% and 3pct23q3 gross profit margin 50.9% increased by 11pct, 23Q1-3 gross profit margin increased by 52.4% and 0.9pct; 23Q3 net profit margin increased 21.2% by 3pct, and 23Q1-3 net profit margin increased 26.6% by 2pct.

The rate for the 23Q1-3 period was 25.5% minus 0.3 pct. Among them, sales/management/R&D/finance rates and year-on-year changes were 11.5% (yoy-1pct), 9.9% (yoy+2pct), 7.3% (yoy-2pct), and -3.1% (yoy+0.02pct), respectively. The increase in management expenses was mainly due to amortization of 23-year employee stock ownership plan expenses.

Recently released AI strategy to deeply empower all aspects of education

Last week, the company released the AI+ strategy and Linggu education model. Currently, Linggu has 10 billion levels of parameters. Through special education data, the second pre-training of the 10 billion level token training data has been completed, and the special scenario of the 10 million level token command data has been fine-tuned. It has better adaptability, accuracy, and performance in the education scene than the general model.

The newly released AI series of products (B-side) includes physical and chemical experiments, English machine tests, and AI solutions for physical education. The corresponding scenarios of the three products are all important areas of change in the curriculum reform of the secondary school entrance examination, and have strong prospects for industrial popularization;

In various types of examinations, Jiafa Education can use the power of the Big Model of Lingqu Education to achieve significant improvements in efficiency in terms of propositions, monitoring, and paper reading; at the same time, it continuously accelerates innovation in educational applications, empowers educational applications to become more interesting, more accurate, and more efficient in terms of personalized learning, timely evaluation and feedback, and resource production.

AI empowers physical-chemical students to experiment and listen to English, and helps reform experimental teaching and listening tests, and introduces experimental AI solutions for physical-chemical students, mainly for experimental teaching and examination scenarios for junior high school physical-chemical students. Use informatization and intelligent technology to achieve online management. The system uses a mature architecture and uses AI to enable functions such as motion recognition, personalized result feedback, authentication, and fraud detection.

Problems such as slow video transmission, high bandwidth requirements, and loss of storage packets are solved, and various evaluation modes such as current test evaluation, current post-test evaluation, and current test machine evaluation are supported. Digital laboratories for physico-chemical biology have been built in Dangchang County, Qin'an County, and Daqing City in Heilongjiang Province in Gansu Province.

The English-speaking AI solution uses three smart devices to transform ordinary classrooms into standardized examination rooms to improve fairness and efficiency. In order to deal with problems such as uneven equivalence and exponential increase in workload brought about by the way tests are organized in multiple batches and sets of papers, the company took the lead in adopting mobile terminal solutions and using special tablets, headsets, and central control equipment in ordinary classrooms to meet the needs of one volume and one batch. Based on the characteristics of mobile terminals, data collection and interaction of various types of examinations can be completed without additional facilities, effectively assisting in the organization and implementation of machine tests for all subjects. Currently, 19 provinces and cities across the country have introduced reform policies for English listening and speaking tests, and full implementation of the contents of this reform has become a development trend.

Benchmark the new round of construction cycle and consolidate leading advantages

The standard examination market may still have a lot of room for growth. From a product perspective, smart security gates may still have a construction period of 3-5 years in the future. The penetration rate of fraud prevention and control and identity authentication products needs to be improved, and online inspection products may increase the demand for AI behavior analysis; in terms of application scenarios, in addition to traditional college entrance examinations, standardized examination rooms such as postgraduate examinations, high school academic level examinations, secondary school examinations, social examinations, etc., are also being deployed. At the same time, the company is also deploying products for new scenarios such as physical and chemical laboratories.

Maintain profit forecasts and maintain “buy” ratings

This round of Jiafa's growth logic is rich ① the traditional standard examination cycle, and the foundation for performance growth; ② the three core products (physical/sports/speaking) card slots have a strategic window period, and their market breadth and depth is significantly greater than that of the college entrance examination; ③ AI empowers +B-side resonance C-side scenario products to completely stimulate growth potential and restructure the valuation system; we expect the company to return net profit of 1.6, 250, and 330 million yuan per share in 23-25, respectively. EPS is 0.4, 0.6, 0.8 yuan/share, corresponding to PE of 41, 26, and 20x, respectively.

Risk warning: risk of declining macroeconomic sentiment; risk of increased industry competition; risk of repeated impact of the epidemic on project delivery; policy implementation falls short of expectations; and gross margin fluctuates with business structure.