Core view: Emerging technologies such as AI and VR have obvious empowering effects on education. They are highly suited to the needs of precise teaching, and the market space is vast. This article analyzes the company's commercial value and future growth momentum from the perspective of the value and competitive advantage of the smart education industry.

Industry-side AI+ education is in high demand, and the prospects for VR+ education are promising

The demand for AI+ education is strong, and the prospects for VR+ education are promising. We believe that the additive effect of AI on education is obvious. As the policy side accelerates the integration of education and AI, the effects that AI+ education can achieve in improving efficiency and reducing the burden on the student and teacher community are in line with the demand for precision teaching since the implementation of the “double reduction” policy, and the market prospects for specific application scenarios such as reading and listening are broad. Furthermore, VR is also effective in empowering education, and is expected to reach a market of 10 billion dollars with commercialization. Among them, research and training are rapidly integrated with VR technology, and companies with leading industry layouts continue to benefit, and are optimistic that related projects will be implemented at an accelerated pace.

Urban media lay out AI+ education in multiple dimensions and continue to deepen VR+ education? The AI+ education product matrix is gradually being clarified, and we are optimistic about empowering performance growth. The company keenly grasps the daily learning, teaching, and office needs of students and teachers, expands the unique AI+ Chinese reading and listening application scenario products, etc., and lays out the AI+ education circuit in a comprehensive manner. The product matrix represented by the “Children's Picture Book Series of Outstanding Traditional Chinese Culture” and the Qingzhi Intellectual Education has gradually become clear, and the first-mover advantage is obvious. We are optimistic that the company is expected to use AI+ education products to monetize knowledge payments and tap new impetus for performance growth.

Deeply involved in the VR+ education business, related projects are expected to accelerate promotion. The company is deeply involved in VR+ education business, continuously exploring new technology applications and digital product innovation, and implementing virtual reality projects at science and technology museums, universities, schools, and research venues in many provinces and cities across the country. With the iterative updating of digital technology and policy catalysis, the company is expected to accelerate implementation and promotion of related projects across the country by highlighting virtual reality technology R&D applications and digital service capabilities.

Earnings Forecast, Valuation and Investment Ratings: We maintain our previous earnings forecasts for the company's revenue and net profit. Revenue for 2023-2025 is expected to be 28.47/31.21/34.46 billion yuan, up 11.45%/9.65%/10.41% year on year, respectively; net profit is 3.70/4.22/482 million yuan, up 10.09%/14.23%/13.98% year on year, respectively. The valuation of the company corresponding to the current market value is 15.2x, 13.3x, and 11.7x, respectively. We selected companies in the publishing industry that are also engaged in book publishing or distribution business as comparable companies, including Phoenix Media, Zhongnan Media, Anhui New Media, Southern Media, Shandong Publishing, and Zhejiang Media. Referring to the PE of comparable companies in the industry, considering the company's high degree of marketization and the leading layout of AI+ education and VR+ education, which is expected to open up room for performance growth, it is reasonable to give it a certain valuation premium, so it is reasonable to give it a certain valuation premium. It is recommended to continue to pay attention and maintain the “increase in holdings” rating.

Risk warning: policy risks on the cultural supervision side; changes in preferential policies for state-owned media enterprises; increased discounts on e-commerce books for short video broadcasts; and the risk that information and data used in research reports are not updated in a timely manner.