Introduction to this report:

Revenue growth was in line with expectations, and profit margins exceeded expectations. Considering the accelerated seizure of advantageous store locations, there is still room for improvement in profit margins or after climbing the slope.

Key points of investment:

Investment advice: In view of the improved competitive landscape and accelerated store expansion, the company's adjusted net profit forecast for 2024-2025 and 2026 was raised to 1.78 (+19%) /2.49 (+13%) /0.33 billion yuan, and EPS was 0.32/0.44/0.58 yuan, maintaining an increase rating.

Performance summary: The company issued a positive profit forecast. In 2024H1, the company achieved revenue of 0.38 billion yuan/ +51.2%, profit margin of 0.08 billion yuan/ +86.31%, profit margin of 21.05% /+3.97pct, adjusted mother 0.091 billion yuan/ +95.44%, profit margin 23.92% /+4.66pct. Among them, the revenue side was in line with expectations, and profit margins significantly exceeded expectations, considering that the peak season in the second half of the year was more flexible. It is expected to bring about an improvement in full-year results.

Short-term industry leaders have adjusted, and pessimism has put pressure on valuations. The overall valuation of the sector is under pressure due to short-term stock price adjustments of leading education and training industry leaders. What is implied is a further increase in market differences in interpretation at the policy and competitive pattern levels. Considering that profit margins are still recovering under the accelerated expansion of Le Store, local leaders still maintain a competitive advantage. The core focus is on marginal changes in profit margins and customer unit prices in the second half of the year.

It was the first to seize an advantage, and there is still room for improvement in profit margins after climbing the slope. Thinking Le accelerated store restoration after the epidemic. According to the applet data, the company had 145 stores as of mid-year, achieved the annual target ahead of schedule and expanded significantly compared to before the epidemic. Considering that the store still had a climbing cycle from opening to maturity, it is expected that there is still room for improvement in 24H2 profit margins. The focus is on summer delivery and winter vacation reservations.

Risk warning: policy risks, increased industry competition, slow recovery in teacher supply.