24H1 revenue also increased 34%, and the return to mother decreased the year-on-year loss by 0.09 billion yuan

The company expects 24H1 revenue of 0.55 billion yuan, an increase of 34%; net profit due to mother of -0.018 billion yuan, a year-on-year reduction of about 0.09 billion yuan; net profit deducted from non-mother of 0.017 billion yuan, a year-on-year reduction of about 0.067 billion yuan.

Among them, 24Q2 revenue was 0.267 billion yuan, up 23%; net profit to mother was 0.028 billion yuan, a year-on-year loss reduction of 64%; after deduction, it was -0.027 billion yuan, a year-on-year loss reduction of 54%.

In the first half of 2024, the company focused on expanding its business scale and achieving high-quality business development on the basis of consolidating its business in the four major sectors of quality education, vocational education, adult education, and international and basic education.

The company further optimizes its business style, adheres to product and teaching drivers, and vigorously strengthens teacher teaching and research team building through continuous upgrading, iteration and improvement of the product system, and creates a competitive and efficient product system. At the same time, the company continues to optimize the campus layout in an integrated manner and promote the integration of campus products and the upgrading of campus environmental innovation. In the first half of the year, the company's performance lost due to costs and expenses associated with expanding the business scale. In addition, the amortization amount for share payments in the company's 2022 employee stock ownership plan for the first half of 2024 was approximately $9.4 million.

The company adheres to a strategy of deepening adjustment and transformation. Under the business pattern of the four major sectors of quality education, vocational education, adult education, and international and basic education, the main battlefield of “non-subject business” focuses on optimizing the business style, strengthening quarterly campaigns, and promoting oral style; on the other hand, comprehensively planning and adjusting existing campuses, deepening the potential of the campus, and moderately increasing the size of the campus according to market demand, to promote the rational layout of campuses in each business sector in an integrated manner. Furthermore, the company continues to be user-oriented, promote the upgrading of campus environmental innovation, and enhance brand recognition and students' sense of experience.

The company actively promotes the integration and optimization of existing vocational education services. Using “integration of obstetrics and education” as the development tone, the company provides a series of services such as general vocational integration, obstetrics and education integration, and science and education integration through college trusteeship, industrial college co-construction, investment and operation. The company is gradually promoting the adult education business, developing “postgraduate studies, certification” and other related training services. Through multi-city, multi-product, and multi-channel superposition, the company is increasing its expansion efforts in the field of adult education and promoting rapid business growth.

The company further consolidated its international and basic education business, deepened its business layout in the Yangtze River Delta and Pearl River Delta regions, and gradually expanded to the C-side while strengthening B-side capabilities, and maintained steady business growth.

Adjust profit forecasts and maintain buying ratings

Considering the performance of the first half of the year, we adjusted this year's performance expectations. We expect the company's net profit to be 0.066/0.17/0.22 billion yuan (original value was 0.09/0.17/0.22 billion yuan), EPS 0.2/0.6/0.8 yuan/share (original value was 0.3/0.6/0.8 yuan/share), and corresponding PE of 40/16/12x, respectively.

Risk warning: policy and regulatory risks; business management risks; risk of new business development falling short of expectations; performance forecasts are only preliminary estimates, subject to the company's financial report.