Published the 23-year financial report, with a strong increase in performance

The company's revenue in 2023 was 489 million yuan, down 0.4%; gross profit was 230 million yuan, up 32.8%; net profit was 90 million yuan, up 66.2%; adjusted net profit was 89 million yuan, up 62.8%.

In 2023, the company's full-time review business revenue was 200 million yuan, an increase of 25.2%; tutoring programs were 140 million yuan, a decrease of 41%; and quality education was 140 million yuan, an increase of 71.1%.

Gross profit margin in 2023 was 47%, up 11.8pct.

Quality education+vocational education+full time go hand in hand

It responds excellently to policy calls, actively transforms, and accelerates the process of obtaining “non-disciplinary for-profit licenses”. Relying on the cumulative reputation and accumulation of teaching, teaching and research over the past 26 years, a new pattern of “quality education+vocational education+full-time education” has been formed.

Excellence empowers the development of the full-time education sector through digitalization, and has built two major moats: the “Excellent Smart Learning System” and the “Life Growth System”. Excellence focuses on cultivating core competencies such as literature and scientific quality. They provide an important guarantee for excellent transformation in Guangdong Province, including “Excellent Programming,” “Funny Little Reporter,” “Thinking Planet,” “Tick Tick Literature,” “Literary Aesthetic Education,” “Bilingual Culture,” “Multiple Thinking,” and “Social Science Literacy.”

Accelerate the layout of quality education to help grow business in the Bay Area

Excellent quality education products have achieved remarkable results in stages in the development of the Guangdong-Hong Kong-Macao Greater Bay Area. In the future, they will continue to promote the steady and far-reaching development of the Guangdong-Hong Kong-Macao Greater Bay Area, particularly in the two economically active Greater Bay Area cities of Shenzhen and Foshan.

We cover post-school user groups through multiple models of “in-school quality products” and “off-campus self-operated stores”, and further cooperate with more primary and secondary schools to combine their own localization advantages, specialized service operation systems and teacher training teams to innovatively use internal and external resources to improve in-school after-school quality product systems such as technology, sports, art, and humanities, and enhance teaching satisfaction.

At the same time, a forward-looking layout of off-campus self-operated stores has been created through partial pilot projects to create a “self-operated model for quality education after school” to meet the needs of users in the Greater Bay Area to improve their quality after school. The company also responds positively to the national concept of “integration of five education”, helps schools implement quality education, create school-based courses with quality education characteristics, and construct a new pattern of in-school after-school services.

Continue to deepen the “quality education+community” model, radiate the periphery with the community as the center, reorganize diversified quality education segmented products, discover students' interests and talents through “direct perception, actual operation, and personal experience”, provide students with more diverse choices, build a comprehensive and multi-category one-stop quality education base, and enhance influence.

Technology empowers the teaching system and continuously promotes high-quality development

The company focuses on providing full-time review services for students, rapidly developing the provincial market, consolidating the competitive position in South China, and striving to advance into the national market and explore and develop new market maps.

In the future, we will closely follow the development trend of global education, and strive to use a precise teaching system empowered by technology to create a teaching ecosystem integrating artificial intelligence and holistic education, so as to more accurately grasp student needs, ensure high-quality output of teaching content through continuous optimization, and accelerate the development of the business sector.

Raise profit forecasts and maintain “buy” ratings

On the journey of education innovation, the company will continuously optimize the layout of the education industry, give full play to the Group's existing advantages, further expand exchanges and cooperation with various educational resources, and promote the company's development in multiple fields and tracks. At the same time, it will also innovate and develop educational products to continuously improve product quality and teaching effectiveness.

Considering ① the current decline in industry supply, the improvement in the competitive pattern of retained institutions, which effectively drive the increase in net interest rates; ② the company's quality education+vocational education+full-time system go hand in hand, diversified development, and digitally empowered; at the same time, 9 products, including Excellent Programming and Thinking Planet, are the first batch of quality products in Guangdong Province to pass non-disciplinary certification by education authorities, providing an important guarantee for transformation; growth potential can be expected, and considering the 2023 performance, we raised the company's 24-25 profit forecast and added a 26-year profit forecast. Revenue for 2024-25 was RMB 690 million and RMB 1.03 billion (original value was RMB 680 million and RMB 990 million), adjusted net profit was RMB 150 million and RMB 240 million (original value was RMB 120 million and RMB 230 million), respectively, and EPS for 24-25 was RMB 0.17 and RMB 0.29 per share, respectively. Revenue in 2026 was RMB 1.28 billion, adjusted net profit was RMB 300 million, and EPS was RMB 0.36 per share; PE in 2024-26 was 16, 10, and 8X, respectively. Maintain a “buy” rating.

Risk warning: policy risk, new business risk, management risk, risk of rising operating costs, risk of the company's low market value in circulation, etc.