Event: The company plans to release the first restricted stock incentive plan in 2024. The number of restricted shares to be granted is 40,000,000 shares, accounting for about 0.65% of the current total share capital of the company.

The details of the equity incentives are as follows:

1) Company performance level assessment requirements: Assess revenue for the two years 2024-2025, ① 2024: trigger value is 3.2 billion yuan, target value is 4 billion yuan; ② 2025 trigger value is 3.68 billion yuan, target value is 4.6 billion yuan. Note: If actual revenue < trigger value, the sales restriction rate at the company level is 0%; if the trigger value is ≤ actual revenue < target value, 80% of the sales restriction is lifted; if actual revenue is greater than or equal to the target value, 100% of the sales restriction ratio is lifted;

2) Equity incentive amortization expenses: 3487.5/2325/3.875,000 yuan respectively in 2024-2026, for a total of 62 million yuan;

3) Grant price: 1.98 yuan/share;

4) Incentive targets: The total number is 260 people;

Earlier, on January 30, the company released a performance forecast. The net profit for the full year of 2023 is expected to be 2.25 to 175 million yuan, a year-on-year loss of 80% to 84%; net profit after deducting non-attributable net profit of -2.3 to 180 million yuan, a year-on-year reduction of 79% to 84%. Among them, the estimated net profit for 2023Q4 is -4.67 to -417 million yuan, 2022Q4 is -279 million yuan; net profit after deducting non-return to mother is -4.72 billion yuan to -422 million yuan, and 2022Q4 is -272 million yuan.

The main reasons for the pre-loss of performance are:

① The 2024 written examination schedule for the provincial exam has been postponed from 2023, and some enrollment and teaching activities that were to be carried out in the fourth quarter have been postponed. In addition, the training course cycle for the recruitment examination is long. The delivery of some of the company's course orders in the fourth quarter have not yet been completed, and the revenue recognition conditions have not been met. The corresponding advance payment will be reflected in the year-end contract debt balance;

② The company accrues one-time influencing factors such as asset impairment losses and deferred income tax asset transfers.

We reaffirm the company's core logic: we look forward to returning to the business cycle, where beta and alpha resonate. 1) Industry level: The steady growth of public officials is a long-term trend, and there is strong demand for training; 2) Company level: Although the Chinese government has fallen into the problem of refunds in the past few years, its core barriers are still there. Channel, teaching, and R&D advantages have always led, and the postgraduate and teacher recruitment and training business has confirmed the company's ability to lay out across tracks; currently, the company continues to lay out in medical care, IT, etc., and is optimistic about its future growth potential.

Profit forecast and investment advice: The company's operations have entered a month-on-month improvement channel. Despite difficulties, the leading position in channels, teaching and research advantages is still stable. Against the backdrop of weak macroeconomic recovery, demand for training in public service positions is strong, and the company is expected to fully benefit. Considering financial expenses, we expect the company's net profit to be 870 million yuan/1.61 billion yuan in 2024-2025. The current stock price corresponds to PE of 24X/13X, respectively, to maintain the “recommended” rating.

Risk warning: Risks such as business recovery falling short of expectations, increased industry competition, and macroeconomic fluctuations affecting consumption.