The company issued a 24H1 positive profit announcement

The company expects 24H1 revenue of no less than 0.38 billion yuan, an increase of 51.2%; net profit to mother of not less than 0.08 billion yuan, an increase of more than 86.5%, including a total share option benefit expenses of about 10.9 million yuan (23H1 is 3.6 million yuan). After exclusion, net profit to mother will be no less than 0.09 billion yuan, an increase of more than 95.5%.

The main reason for the increase in net profit to the mother is ① the increase in the total number of tutoring hours drives the company's revenue growth; ② the company continues to improve operating efficiency and improve operational performance.

The policy mentions education and training consumption to guide healthy development

Recently, the State Council issued “Opinions on Promoting the High-Quality Development of Service Consumption”, which mentions education and training consumption: promoting the opening of quality education resources by institutions of higher learning, scientific research institutions, and social organizations to meet the diverse and personalized learning needs of society; promoting the quality and efficiency of vocational education to build high-level vocational schools and majors; and promoting social training institutions to improve service quality in response to public demand.

In accordance with relevant regulations, schools are instructed to introduce third party institutions with corresponding qualifications to provide high-quality non-subject public welfare after-school services through purchasing services, etc.; encourage internationally renowned institutions of higher learning to carry out high-level cooperation in running schools in China.

We believe that the mention of education and training consumption this time may have some representative significance. In the context of a solid state of demand in the industry, healthy development or long-term positive signals are encouraged; with the improvement of the operating environment, leading institutions are expected to benefit from this and achieve positive growth.

The main business momentum is good, and the results of non-disciplinary literacy are impressive

The company's main business maintained profits and showed a good growth momentum in 24H1, and the company has actively implemented business transformation in recent years. Since the fall of 2021, it has launched various non-subject literacy courses, with impressive results.

In addition, the company is actively exploring and launching initiatives such as study tours and international courses; since the summer vacation, the company has hosted many university study tours in the UK, Japan, and the US. We believe this move is expected to broaden the company's revenue base and contribute to long-term development.

Establish international strategic partnerships to create new business growth points

Earlier, Think Le Miaowei International signed a strategic cooperation agreement with New Zealand's Long Bay High School to formally establish a strategic partnership to jointly build a platform for mutual learning. Changwan Middle School exclusively authorizes Similowei International to enroll students in China, and plans to open a Thinkle Miaowei International Campus at Changwan Middle School in New Zealand.

In the future, the two sides will continue to deepen cooperation and strive to provide students with a better educational experience and more opportunities for development. We believe that cooperation between the two sides may provide more high-quality international education resources and opportunities, promote in-depth cooperation between Singapore and Singapore in the field of education, or bring new growth points to the company.

Raise profit forecasts and maintain buying ratings

Based on the company's 24H1 positive profit announcement, we have raised our 24-26 profit forecast.

We expect revenue for the full year of 2024-26 to be 0.98 billion yuan, 1.56 billion yuan, and 2.2 billion yuan (original values were 0.97 billion yuan, 1.35 billion yuan, 1.83 billion yuan, respectively), net profit of 0.2 billion yuan, 0.27 billion yuan, and 0.33 billion yuan respectively (original values were 0.14 billion yuan, respectively) RMB billion, RMB 0.19 billion, RMB 0.23 billion); EPS is RMB 0.36 per share, RMB 0.49 per share, RMB 0.60 per share (original values were RMB 0.25 per share, RMB 0.34 per share, RMB 0.42 per share), corresponding PE is 13, 9, and 8x, respectively.

Risk warning: policy risk; management risk; risk of rising operating costs; performance forecasts are only preliminary estimates, subject to the company's financial report.