Deeply involved in the industry for many years and built a well-known education and training brand
The company has been deeply involved in the Shanghai region for more than 30 years. It has many years of brand and customer accumulation, a broad customer base, high customer recognition and trust, and has won the “China Top Ten Brand Education Group”. It has rich educational resources and a solid foundation for carrying out various education service businesses; by the end of 23H1, the company had 91 directly-managed teaching centers in Shanghai.
In '23, the company's revenue of 970 million yuan increased 27%, net profit to mother of 190 million decreased by 211.9%, and net profit after deducting non-attributable net profit of $158 million decreased 21.3%; along with the expansion of business scale and efficiency, 24Q1 profits have improved significantly. The 24Q1 company's revenue of 280 million yuan increased by 47.4%, and net profit to mother of 111 million yuan increased by 136.4%.
Deepen the strategic layout and promote sustainable growth
In 2024, the company will continue to deepen its strategic business layout in the four major sectors of quality education, vocational education, adult education, and international and basic education. At the same time, the company should take sustainable growth as the fundamental goal, strengthen the teaching force and enhance product strength through continuous iteration and product upgrades; strengthen lean management and refined operation by strengthening organizational collaboration, improving organizational efficiency, improving organizational strength, and improving product strength and organizational strength as fundamental means, focus on business value and business health, establish a healthy, effective, sustainable growth, and sustainable profit-creating business system to promote high-quality business development.
The education and training industry is transforming, and segmented racetracks are heating up
China's education and training industry is still undergoing transformation. Segments such as vocational education, adult education, and studying abroad are heating up, and non-subject training has become a useful complement to school education with more standardized and healthy operation methods. Education and training institutions have stepped up the vocational education circuit one after another. Vocational education in China has moved from a single government entity to the participation of multiple actors, from scale expansion to content development, and from referring to the general education model to a type of education with enterprise participation and distinctive professional characteristics.
Strengthen overall deployment and promote digital construction
In order to further enhance synergy and integration effects and cooperate with business transformation, the company has established a “special shift system and column” management system to comprehensively promote business collaboration, amplify business value, and improve management efficiency.
The company continues to promote digital construction to further improve front-end sales efficiency and resource utilization efficiency. While continuously improving teachers' teaching standards and service capabilities, the company also continues to polish, iterate, and improve the product system, continuously improve product strength, and enhance students' sense of attainment and satisfaction.
First coverage, giving a “buy” rating.
As one of the top ten education brands in China, the company has been deeply involved in the Shanghai region for more than 30 years. It has many years of brand and customer accumulation, focusing on the main battleground of “non-disciplinary business”, optimizing business and product lines, and accelerating business development. We expect the company's revenue for 24-26 to be RMB 12.3/15.3/RMB 19.01 billion, net profit to mother of RMB 0.9/1.7/220 million, and EPS of RMB 0.32/0.60/0.76 per share, respectively. Referring to the comparable company average, the company was given 23.5-24.5 times PE in 25 years, corresponding to a target price of 14.1-14.7 yuan.
Risk warning: Policy and regulation risks, market environment risks, business management risks. Estimates are subjective risks, such as small market capitalization and easy stock price fluctuations.