The company released financial reports

The company's 24Q1 revenue was 700 million (23Q1 was 0.2 billion); the return was 73 million (23Q1 was -0.03 million); deducted not 57 million (23Q1 was -03 billion);

23A's revenue of 250 million yuan increased by 131%, to the mother of -92 million, after deducting non-110 million; of these, 23Q4 revenue was 200 million (22Q4 was 40 million), which went back to -88 million dollars, and deducted non-100 million dollars.

23A Construction Engineering Design and Consulting Revenue of 50 Million, Non-Academic Training Business Revenue of $198 Million; Total Profit of 100 Million, including Construction Engineering Design and Consulting Profit - 27.52 Million, and Non-academic Training Business Profit - 82.586 million.

To achieve industrial breakthroughs and transformation, in November 2023, the company began to carry out non-academic training services through its wholly-owned subsidiary Huatu Education Technology. It mainly includes national and local civil service recruitment examination training, public institution recruitment examination training, medical and health system recruitment training and corresponding qualification examination training. The company's non-academic training business is developing smoothly.

By the end of 2023, the company had set up more than 300 branches across the country and had carried out training business, with a total of more than 50,000 trainees; the main reasons for the company's loss of non-academic training business in November-December 2023 were:

Since November 2023, the company has continued to conduct non-academic training and recruit students. The recruitment examination period is seasonal. November-December is neither the peak period for the publication of various recruitment announcements, nor the peak season for recruiting new students throughout the year.

Among the main revenue, tuition fees for regular classes and miscellaneous fees for agreement classes are recognized according to the teaching stage. Advance tuition fees for agreement classes are confirmed income after the agreed conditions are met, but delivery costs are confirmed according to actual occurrence, and the time of cost confirmation is generally earlier than the time of revenue recognition. In addition, the recruitment examination and training course cycle is long. Currently, the delivery of some of the company's order courses has not been completed or the revenue recognition requirements have not been met. The advance payment corresponding to this part of the order will be reflected in the year-end contract debt balance.

By the end of 2023, the company's contract debt balance was 230 million yuan (excluding tax), including 49.034 million for regular classes, 96.252 million yuan for miscellaneous fees for agreement classes, 82.57 million yuan for agreement classes, and 2.8639 million yuan for online courses.

The tuition fees for regular classes and miscellaneous fees for agreement classes will be recognized as income upon delivery of the course, and the tuition fee portion for agreement classes will be recognized as income when the income recognition conditions are met. From the perspective of business start-up and continuous development, since Huatu Education Technology launched its business, it has completely built up all the necessary resources for business development, such as personnel, teaching staff, and training delivery sites.

Efficient channel construction spans the whole country

For the company, the non-academic training business is a new business, and the construction of learning outlets is the cornerstone of continuous business development. The company started from scratch and gave full play to its efficient channel construction capabilities. It has set up more than 400 branches nationwide, and the number of direct-run outlets involving full coverage has exceeded 1,000.

Highly recognizable brands enable market promotion

The “Huatu” brand is highly recognizable in the vocational education industry. After years of continuous development, Huatu Hongyang has established a good brand image and market reputation in the industry. The company is authorized to use its trademarks and other intangible assets free of charge to carry out non-academic vocational training business. The company uses highly recognizable brands, combined with the listed company platform and the “Huatu” brand value, to enable the company's marketing promotion.

Deeply involved in teaching and research, and winning word of mouth for high-quality course delivery

The company continues to pay great attention to teaching, research and teaching. In terms of teaching and research, the company always adheres to quality as the foundation, continuously consolidating the teaching and research heritage around testing, application, interviews, subject expertise, etc.; in terms of teaching, the company has formed a large number of outstanding teachers with high academic qualifications, rich experience, and strong overall quality through strict screening and professional training to ensure that every teacher has rich knowledge, excellent teaching skills and a high sense of responsibility. In order to improve teachers' teaching standards, the company will continue to provide professional training and development opportunities to encourage teachers to continue learning and improving. At the same time, the company has established a complete teaching quality assessment system to provide timely feedback and improve teaching methods to ensure that every student can receive high-quality education. We aim to provide customers with an excellent service experience, attract more potential students through word-of-mouth communication, and increase the user scale and market share.

Raise profit forecasts and maintain “buy” ratings

Based on the gradual development of the company's education business at the end of '23 and '24, and the company's Q1 revenue performance greatly exceeded expectations, we raised our profit forecast. The revenue for 24-26 is 2.8 billion, 3.5 billion, and 4.4 billion (the value before 24-25 was $0.97/112 million, respectively); net profit to mother was $420 million, 51 million, and $620 million respectively (prior value of $0.07/013 million, respectively); EPS was 3.00/3.64/4.38 yuan/share, respectively, and the corresponding PE was 34/ 28/23X

Risk warning: Failure to perform the free license agreement as scheduled; education and training business development falls short of expectations; new related transactions; industry policy risks; risk that the counterparty to the lease contract cannot perform due to changes in business conditions or other reasons.