Incident: Badashu Holdings, a shareholder of Kevin Education, transferred 14.84% of Kevin's shares to China National Investment through a private agreement transfer at a price of 3.69 yuan/share, and China State Investment became the company's largest shareholder.

Prior to this change in equity, Badashu Holdings was the company's largest shareholder, while China State Investment had superior voting rights as the company's controlling shareholder. Previously, Badachu Holdings had a shareholding ratio of 28.84%, making it the largest shareholder, but all voting rights for the corresponding shares were entrusted to Haiguo Investment. Haiguo Investment's shareholding ratio is 1.16%, but the voting power is 30.00%. It is the controlling shareholder of the company.

Badachu Holdings transferred 14.84% of the company's shares to Haiguo Investment. After this change in equity, Haiguo Investment became the largest shareholder. After the share transfer of the shares of Badashu Holdings, the shareholding ratio fell to 14%, while the share share ratio of China State Investment rose to 16%. The voting share of China National Investment remained unchanged at 30%. So far, Haiguo Investment has become Kevin's largest shareholder with a 16% shareholding ratio.

Rationalize the relationship between voting rights and equity to help Kevin's education develop in the future. Although the actual controllers of Badachu Holdings and Haidian SDIC are all Beijing Haidian State-owned Assets Administration Commission, the shares have penetrated upward. The Haidian State-owned Assets Administration Commission holds 51% of the shares in Badachu Holdings, and the shareholding ratio of HSDIC is 100%. According to the statement in this announcement, after becoming the largest shareholder of Kevin Education, it is conducive to achieving optimal allocation of state-owned resources and effectively promoting the strategic restructuring of state-owned enterprises. Kevin Education can further use the various resources of China National Investment Corporation to promote the continuous and stable development of business and preserve and increase the value of state-owned assets.

The nine rules of the new country bring institutional incentives, and pay attention to subsequent changes in Kevin's education. In April '24, the State Council issued “Certain Opinions on Strengthening Supervision and Risk Prevention and Promoting High-Quality Development of the Capital Market”. Since then, the Shanghai Stock Exchange and the Shenzhen Stock Exchange have issued the “Shanghai Stock Exchange Stock Listing Rules (April 2024 Revision)” and the “Shenzhen Stock Exchange Stock Listing Rules (2024 Revision)”, raising and revising the thresholds related to stock delisting and ST. We have always emphasized that this change in the system should be viewed from a dynamic and dialectical perspective. After the publication of the Nine Rules of the New Country, some small and medium market capitalization listed companies will, to a certain extent, be encouraged to improve management efficiency and speed up the pace of capital operation. Therefore, the New National Article 9 is an institutional incentive for these companies. This logic is expected to be confirmed in Kevin's education, and attention is being paid to the company's subsequent changes.

Maintain profit forecasts and ratings. Maintaining the forecast, the company's net profit for 24-26 is estimated to be 0.01/0.058/0.109 billion yuan, corresponding to PE 235.1/39.9/21.2 x, maintaining the “incremental” rating.

Risk warning: (1) education industry policy risks; (2) risks that the optimal allocation of state-owned resources falls short of expectations; (3) Kevin Education's current three major businesses, K12 school operation, integration of industry and education, quality education and training, and the risk of falling short of expectations.