Accelerate market layout and achieve rapid growth in 2023 results

In 2023, the company achieved revenue of 604 million yuan, an increase of 46.47% over the previous year, and achieved net profit of 131 million yuan, an increase of 90.05% over the previous year. Mainly, the two major business areas of smart testing and smart education worked simultaneously, and orders both achieved significant growth. In terms of the smart testing business, the company has accelerated its market layout, launched new products to seize the market and increase market share on the basis of upgrades and additions to the original products; in the smart education business, the company provides accurate products that meet top-level planning and immediate business needs, and actively lays out smart sports, English speaking and other fields, and has received more and more customer recognition and market opportunities. With the continuous implementation of policies such as education evaluation reform, examination and enrollment system reform, and digitization of education in the new era, the company is expected to continue to seize industry opportunities and market demand and continuously improve its performance.

Announcing the 2024 employee stock ownership plan to enhance employee motivation The company announced the “2024 Employee Stock Ownership Plan (Draft)”, which plans to use 2,563,684 shares to be repurchased, accounting for 0.64% of the company's total share capital; the transfer price is 6.54 yuan/share; participants are company directors (excluding independent directors), senior management, supervisors, middle management and core management, with a total number of no more than 86 people.

The assessment goals are: 1) The first unlocking period: based on the company's 2023 net profit, 2024 net profit is not less than 105% of the 2023 base, or operating income is not less than 110% of the 2023 base. 2) Second unlocking period: Based on the company's 2023 net profit, the cumulative net profit value for 2024-2025 is not less than 215% of the 2023 base, or the cumulative operating income value is not less than 225% of the 2023 base. 3) Third unlocking period: Based on the company's 2023 net profit, the cumulative net profit value for 2024-2026 is not less than 330% of the 2023 base, or the cumulative operating income value is not less than 345% of the 2023 base. This equity incentive plan uses lower incentive costs and assessment goals to motivate participants in the shareholding plan, which can truly increase the enthusiasm of the company's employees to work and promote the achievement of the company's overall goals.

The new product was successfully implemented. The big model enabled the Education Information Technology Company to optimize, streamline and upgrade the original product line in 2023, and successfully launched new products such as “Integrity Intelligent Security Gate Solution”, “Physical and Chemical Experimental AI Solution”, “Physical Education AI Solution”, and “English Machine Test AI Solution”, and received a good response in the market. The “Integrity Smart Security Gate Solution” can achieve a full range of accurate mobile phone detection, integrate inspection and face recognition, support multi-dimensional visual presentation, and set the first level of fairness and impartiality in examinations. In 2023, the company's security gate plan was deployed and implemented in college entrance examinations and university postgraduate examinations in many provinces and cities, and received unanimous praise from customers.

The physico-chemical experimental AI solution targets the two major application scenarios for physical, chemical, and biological experimental operation teaching and testing. Based on student teaching and testing terminals, it uses AI to build a physico-chemical experimental ecosystem, and provides rich teaching cloud resources and various evaluation models. At present, the construction of benchmark demonstration projects has been successfully completed in many regions.

The AI solution for physical education integrates technical means such as AI machine vision, cloud computing and big data to build a digital sports space, form an integrated closed loop of “learning, practice, testing, competition, and evaluation”, and provide a comprehensive smart sports solution with multiple scenarios. AI-supported testing programs cover sports entrance examinations and physical health monitoring programs. It has more than 70 sports categories. Related products and services have been launched in more than 10 provinces including Beijing, Shanghai, Inner Mongolia, Sichuan, and Guangdong, serving hundreds of schools and tens of thousands of teachers and students.

Along with the innovation of generative AI technology, the company launched the “AI+” strategy and simultaneously completed the release of the Linggu Education Big Model and AI series products. The Linggu Education Model is a product built by the company based on core application scenarios in the education industry. Currently, Linggu has 10 billion level parameters, and through special data in the field of education, it has completed the second pre-training of 10 billion token training data, and fine-tunes the 10 million token instruction data special scenario. It has stronger adaptability, higher accuracy, and better performance than the general model in education scenarios. Driven by the “AI+” education strategy, the company comprehensively upgraded its own product matrix, used artificial intelligence technology to continuously improve product capabilities and application value, explore new scenarios and applications to better empower education; use technological upgrades and industry accumulation to further explore more education business fields, provide more intelligent, efficient and personalized education services, and promote educational innovation.

Profit forecasts and investment advice

The company focuses on the two major business directions of smart testing and smart education, and actively explores the integration of AI with next-generation solutions such as English listening and smart sports to help industrialize AI+ education, and its performance is expected to reach an inflection point. The company's 2024-2026 EPS is expected to be 0.49, 0.66, and 0.88 yuan respectively, and the PE corresponding to the current stock price is 26.10, 19.56, and 14.62 times, respectively, maintaining a “buy” rating.

Risk warning

Policy implementation fell short of expectations, industry competition intensified, new product promotion fell short of expectations, etc.