Incident: In the first half of 2024, the company achieved revenue of 1.63 billion yuan, YoY -3.08%; net profit to mother of 0.278 billion yuan, YoY +240.88%; adjusted net profit to mother of 0.349 billion yuan, YoY +21.20%, adjusted net profit to mother 21.4%, YoY+4.3pct.

The company's revenue declined slightly due to the time limit for the written joint examination. By business: 1) The training business achieved revenue of 1.379 billion yuan and YoY -3.1% in the first half of 2024. Among them, online learning products/large class training courses/small class training courses/other training courses achieved revenue of 0.65/0.266/1.026/0.023 billion yuan respectively, mainly due to the colliding period between the written test period for public sector personnel recruitment and the provincial civil service joint examination in the first half of 2024, which led to a decline in sales of company personnel recruitment examination training courses in 2024; 2) Book sales in 2024 Revenue of 0.252 billion yuan was achieved, YoY -3.0%, mainly due to the decline in sales of textbooks and guidance materials for personnel recruitment in public institutions due to the time lag between the two major joint examinations.

Self-developed technology drives efficiency improvement, and profitability continues to improve. In the first half of 2024, the company achieved a gross profit margin of 54.2%, YOY+3.3pct. Mainly due to ① artificial intelligence and other online technology driving the company's teaching efficiency and reducing teacher expenses, leading to a reduction in employee welfare expenses in the training service business; ② stable online business and achieving synergy effects and improved operational efficiency through the AI Empowerment + OMO model, the company was able to operate an expandable business.

The results of business adjustments have been remarkable, and future revenue is stable, moderate and positive. In the first half of 2024, the company's contract assets were 0.057 billion yuan, YoY +47.30%, mainly due to the company's adjustment of business development strategies to meet market demand, and sales of postpaid agreement classes increased; contract liabilities were 0.212 billion yuan, YoY +41.94%, mainly due to the increase in prepaid course sales due to the upcoming exam week, which guarantees the company's future revenue growth.

Profit forecast and investment suggestions: The popularity of recruitment tests continues to increase; the OMO business model and AI help the teaching and research business reduce costs and increase efficiency, and the competitive advantage is stable. As a leading domestic recruitment and training agency, the company is expected to have a snowball effect to obtain more industry dividends. The company is expected to achieve adjusted net profit of 0.555/0.683/0.792 billion yuan in 2024/2025/2026, YoY +24.7%/23.0%/16.1%, maintaining a “buy” rating.

Risk warning: policy risk; competition increases risk; risk of changes in recruitment examination arrangements.