Performance summary: In '23, the company achieved revenue of 534 million yuan/yoy -33.43%, net profit to mother of 0.16 million yuan/yoy -91.26%, after deducting net profit of 23 million yuan/yoy -83.90%. In 23Q4, the company achieved revenue of 89 million yuan/yoy -50.73%, net profit attributable to mother -86 million yuan/yoy -797.83%; net profit deducted from non-mother -50 million yuan/yoy -1624.68%. The decline in the company's performance throughout the year was mainly affected by the overall macroeconomy. Revenue from the company's main training business fell by 33.91%. The company focused on employment training. Upstream training demand was driven by the recruitment needs of downstream enterprises. The company's training circuit was superimposed on IT training. IT industry adjustments have shrunk in the past two years, and the company's main business revenue is under pressure due to a combination of factors. At the same time, as the company reduced costs and increased efficiency, year-end expenses such as rent-refund penalties and separation compensation raised the company's overall costs. In addition, the company's trust products were overpaid, and the fair value change lost 50 million yuan, which was recorded as non-profit and loss; the non-academic higher education business stopped enrolling students and the secondary vocational school business enrollment expectations were adjusted, and the company prepared 24.87 million yuan for depreciation of the corresponding campus.
The launch of the Hongmeng Course is expected to open up training needs. In 2023, the company launched new courses on integrated circuit application development (including embedded) and e-commerce visual design, and added Hongmeng application development course content to the HTML & JS+ front-end course in the fourth quarter; in early 2024, Hongmeng Application Development established a separate new course system. We believe that the company's launch of the Hongmeng Course has a large audience and is expected to marginally improve the company's short training business. In a situation where Android Hongmeng is not compatible, downstream Internet companies are increasing in demand for IT personnel to master the Hongmeng system. This demand is expected to be transmitted to the training side of upstream Hongmeng talents. In particular, in-house programmers will release retraining requirements.
Senior positions are progressing steadily, which is expected to be a useful complement to short training. On January 29, 2024, the company increased its capital to its wholly-owned subsidiary Datong Good School with its own capital of RMB 260 million. At present, significant progress has been made in the construction of related projects. The long-term training business system is longer and more stable, which can further enhance the company's ability to resist external risks and overall competitiveness.
Dividends: In 2023, the company plans to distribute a cash dividend of 0.16 yuan for every 10 shares to all shareholders, for a total of 6.44 million yuan, with a dividend rate of 41%.
Investment advice: The company is a leader in the IT training industry, continues to polish products to improve R&D capabilities, and has deep competitive advantages. The current weak macro environment is compounded by adjustments in the segmented downstream IT industry. The company's external environment is relatively severe, and operations are under pressure. Looking at the medium to long term, the company's demand for digital talent training comes from the vast transformation of the domestic digital economy. Currently, the company is actively promoting Hongmeng course research and development, capturing new demand for short training, and actively building a higher vocational education sector to increase the company's resilience to risks. We expect the company's net profit to be 1.1/142/173 million yuan in 2024-2026, respectively, and the corresponding PE is 35X/27X/22X, respectively, maintaining the “recommended” rating.
Risk warning: Economic weakness affects corporate recruitment needs, and academic vocational education enrollment falls short of expectations.