2024 revenue budget of $1.33 billion, expected to increase 38% year over year

The company announced the 2023 shareholders' meeting data. Among them, the draft 2024 financial budget revealed 2024 revenue of 1,331 billion yuan, an increase of 38% over the previous year; combined with the company's 24Q1 revenue (47% increase), we expect the annual target achievement rate to be high.

The company plans to continue to deepen the business layout in the four major sectors, continue to iterate and upgrade products, optimize teaching quality, strengthen brand management, improve organizational efficiency, and strengthen lean management and refined operation; see the 2024 business plan for details:

① Quality education: Keep up with policy requirements, maintain flexible business adjustments, and enhance market share and brand influence. Optimize non-subject business play, take entry-level play as a key measure, and systematically combine factors such as products, teachers, campuses, and markets to promote rapid business development.

Strengthen campus layout and operation management, and improve campus health. Implement dynamic management of campus classification for each business division, implement a system of responsibility for divisions and principals, and strengthen campus management capabilities.

② Vocational education: Continue to promote the integration and optimization of vocational education resources, and provide middle and higher vocational colleges with a series of services such as general employment integration, integration of industry and education, and integration of science and education through investment and operation, consulting and upgrading, college trusteeship, and joint construction of industrial colleges. At the same time, by strengthening various aspects such as brands, channels, and products, we drive customized business development for enterprises and promote the development of training businesses such as recruitment, academic upgrading, and international study abroad.

③ Adult education: Focus on the academic upgrading needs of college students and working people, gradually move towards the national market, achieve product, sales and traffic resonance in many cities, and continue to accumulate new business growth potential; dig deeper into user pain points, lay the foundation with word of mouth, focus on developing education promotion businesses for working people, examine and increase B-side enterprise cooperation, expand traffic increase transformation, and gradually expand categories.

④ International and basic education: Focus on regions such as the Yangtze River Delta, Pearl River Delta, and South China, focusing on developing businesses such as hosting schools, cooperative schools, science and innovation laboratory construction and cooperation, developing science and innovation contests, summer camps, etc.; relying on overseas resources to promote front-end and back-end services abroad.

It is proposed to dispose of Jiaotong University Onli shares and focus on the main education business

In addition, the company announced that it authorized the management to dispose of Jiaotong University Onli shares; currently, Onli Education still holds 1.0013 million shares of Jiaotong University Onli, accounting for 1.29% of the total.

We believe that this disposal is conducive to focusing on the company's main business and at the same time better meeting the financial needs of listed companies for business development. Over the past few years, Onli Education has continued to withdraw from Jiaotong University Onli (mainly engaged in health products and medical care) shares to focus resources on the main education business. After multiple tests such as the double reduction policy and the epidemic, it is currently deeply involved in the Shanghai market and is expected to accelerate growth.

Raise profit forecasts and maintain “buy” ratings

The company is gradually focusing on the main education business, continuing to deepen the layout of the four major sectors of quality education, vocational education, adult education, international and basic education, improving the teaching system and strengthening brand building. Performance is expected to continue to improve under refined operation. According to the company's 24-year financial budget, we raised our revenue expectations. We expect the company's 24-26 revenue to be 13.5/17.6/2.28 billion (previous values were 12.3/15.3/19.1 billion yuan, respectively). At the same time, considering the company's expansion of the campus or significant investment, we maintain the 24-26 net profit forecast of 0.9/1.7/220 million yuan respectively. EPS was 0.3/0.6/0.8 yuan/share, respectively, and the corresponding PE was 35/19/15x, respectively.

Risk warning: policy and regulatory risks, market environment risks, business management and other risks.