Description of the event

2024H1: Revenue 0.389 billion yuan, +35.16% year over year, net profit to mother 0.136 billion yuan, +29.19% year over year, net profit not after deducting 0.136 billion yuan to mother, +38.84% year on year.

Single quarter: Revenue 0.249 billion yuan, +39.50% YoY, net profit to mother 0.112 billion yuan, +28.12% YoY, net profit not included after deducting 0.111 billion yuan, +33.63% YoY.

Incident comments

Major customer strategies have been implemented effectively, and revenue performance has grown rapidly. In the first half of 2024, the company relied on the brand influence of listed companies and insisted on implementing the big customer strategy. Its two main businesses, management training and management consulting, grew significantly, and its revenue share increased to 19%, jointly driving the company's revenue side to 35% growth.

In terms of profitability, changes in the revenue structure led to a slight decline in gross margin, effective cost control, and a significant decline in the cost ratio during the period. The 2024H1 company's comprehensive gross profit margin was 76.14%, -2.21 pcts year over year, mainly due to the rapid increase in revenue growth and share of management consulting products with relatively low gross margin, which dragged down overall gross margin performance (2024H1, gross profit margin of 83.55% for management training, 46.12%); on the cost side, the company's sales, management, finance, and R&D expense ratios were -2.39/-2.33/+1.40/ -1.21 pcts year on year, which to a certain extent offset the decline in gross margin The impact.

The contract debt at the end of the period was 1.001 billion yuan, laying the foundation for performance growth in the second half of 2024. The implementation of the major customer strategy was implemented, the number of high-quality customers increased, and the price increase of superimposed products. Starting July 1, 2023, the 10-person group price for the concentrated EMBA was raised from 0.198 million yuan to 0.258 million yuan, the price increase was 30%; the customer unit price of the principal EMBA was raised from 0.298 million yuan to 0.358 million yuan, and the price increase was 20%; the two jointly promoted the increase in the company's contract debt volume on account since the second half of 2023, and future revenue performance is visible Increased accuracy and certainty.

In terms of management and operation, build a team of professional talents, shorten the assessment cycle, survive the fittest, improve organizational efficiency, and improve per capita performance. Currently, the company's talent team construction has been very effective, forming a high-quality system for selecting and cultivating talents, enhancing the professionalism of business personnel, and providing organizational guarantees for the continuous and steady growth of the company's performance.

Looking ahead to the future market, I am optimistic that the company will adhere to a “grounded and pragmatic” product positioning, keep up with market demand trends, and continue to iterate and update; continue to implement the big customer strategy, optimize the customer structure and open up market coverage; improve per capita performance and the company's overall profit margin with a more professional talent pool and more efficient management model.

It is estimated that in 2024-2026, the company's net profit to mother will be 0.272, 0.349, and 0.422 billion, respectively, and the corresponding PE is 14, 11, and 9X, respectively, maintaining a “buy” rating.

Risk warning

1. After the price increase of core products, demand from some customers declined;

2. The economic environment is under pressure, and some companies are reducing training expenses; 3. Competition in the industry intensifies, competitors with similar positions have increased; 4. Core team members have been lost, and course sales fall short of expectations.