Core views:

Incident: The company received the “Proposal on 2024 Interim Dividend” issued by the controlling shareholder yesterday. In order to enhance the investment value of listed companies, the controlling shareholder proposed to distribute a cash dividend of 0.10 yuan/share (tax included) to all shareholders in mid-2024. The listed company will draw up a 2024 interim dividend plan and submit it to the board of directors and shareholders' meeting for consideration. In 2023, the company drastically raised the year-end dividend amount from 0.185 yuan/share in 2022 to 0.305 yuan/share, and proposed another increase in mid-term dividends in 2024, which demonstrates the company's abundant cash flow strength, firm confidence in future development prospects, and the concept of sharing development results with investors. Currently, in the A-share education publishing sector, Anhui New Media's cash volume, repurchase amount, dividend ratio, and dividend ratio all rank among the top in the sector.

Profit forecasting and investment advice. In 2024-2026, we expect the company's revenue to be 11.161/11.334/11.542 billion yuan, and net profit to mother 0.893/1.042/1.151 billion yuan. As the corporate income tax exemption policy previously enjoyed by the company expires this year, the company's growth on the net profit side is under pressure. However, the company has the exclusive textbook distribution qualification in Anhui Province and is responsible for the distribution of all free textbooks at the compulsory education stage in Anhui Province. On the one hand, the company's main textbook distribution business has maintained steady growth based on the channel advantages of Anhui Province. On the other hand, the company relies on its main business resources to actively develop innovative businesses such as education services, games, and supply chain logistics, and has a relatively high growth rate in the sector. As of March 31, 2024, the company had monetary capital of 10.9 billion yuan and sufficient capital on hand. At the same time, the company actively gave back to investors, implemented share repurchases in 2023, and greatly increased the dividend ratio. In 2024, it is proposed to increase the interim dividend. We maintain the company's PE valuation of 18 times in 2024, corresponding to a reasonable value of 8.21 yuan/share, maintaining a “buy” rating.

Risk warning. Fewer students enrolled; demand for books declined; progress in the “AI+ education” business fell short of expectations; uncertainty in the game business; changes in corporate income tax policies applied by the company.