Incident: The company released an annual report forecast. In '23, the company expects to achieve net profit of 120 to 150 million yuan, 61.99% to 102.49%, and is expected to achieve net profit after deduction of 123 to 153 million yuan, an increase of 56.83% to 95.08%. In 23Q4, the company expects to achieve net profit of 0.20 to 50 million yuan, an increase of -2.8% to 139.8%, and is expected to achieve net profit after deduction of 0.23 to 0.53 billion yuan, an increase of 96.7% to 352.7%.

Comment:

Vocational schools and repeat business continue to pick up. Benefiting from the steady improvement of the external environment, the steady improvement in the quality of teaching services and operational efficiency, and the increase in the company's vocational education sector profits, we estimate that the vocational education business contributed 120 to 130 million yuan in profit in 23 years.

The proportion of high value-added inks has increased. The proportion of high value-added environmentally friendly ink products launched has increased, contributing to the company's performance. We estimate that the ink business contributed 100 million yuan in profit in '23.

Investment advice: High performance growth in 23 years, showing good resilience in recovery, repetition and gradual resumption of vocational school business enrollment, contributing to a solid basic market, and future AI courses are expected to contribute more. We expect EPS to be 0.41/0.50/0.64 yuan in 2023-25, and the stock price corresponding to PE will be 23x/19x/14x at the close of January 17, '24, maintaining a “buy” rating.

Risk warning: The number of students enrolled falls short of expectations, causing the company's revenue and profit to fall short of expectations; risk of macroeconomic downturn; risk of personnel turnover in key businesses.