Thinking is happy to announce its interim results on August 19. Revenue for the first half of the year was 326 million yuan, up 10.2% year on year; operating profit was 67 million yuan, up 30.3% year on year; adjusted net profit was 64 million yuan, up 6.8% year on year. Meanwhile, the company announced an interim dividend of HK$0.06 per share. As for Thinking Fun, we wrote the theme report “How to select stocks in the Hong Kong stock market after the crash?” on April 3 China suggests focusing on the fact that as of the closing price on August 21, the stock price had risen 130%.
Academic exam preparation courses are still the company's main revenue, contributing about 97% of revenue, up 10.6% year-on-year in the first half of the year; quality education courses remained stable. The number of students increased 7.1% year over year to 124,000, while total tutoring hours and average fees per class hour increased 5.1% and 4.8%, respectively.
Extracurricular training is gradually recovering from the pandemic. During the pandemic, offline training was impacted, and the company promptly adjusted offline courses to online courses, thereby reducing the impact of the epidemic. In the long run, the company believes that offline is still the main and most effective way to learn for K12. As the domestic epidemic was gradually brought under control, the company's offline training business also gradually recovered from the epidemic, and classes were fully resumed in June. Furthermore, the company said that summer student classes are well drained. The overall number of students in summer vacation experience courses this year increased 91% year on year, with cities outside of Shenzhen increasing by 215% year on year.
Continue to cultivate the Greater Bay Area and accelerate expansion. By the end of June, the number of the company's learning centers had increased to 127, compared to 100 by the end of 2019. The company still focuses on the Greater Bay Area. It expanded its business to Guangzhou in the first half of the year and launched “Thinking Music Online School” in Shantou. Currently, the business scope has covered 9 cities. At the same time, the company will also continue to vigorously promote two-teacher classrooms, thereby accelerating penetration into second- and third-tier cities where competition is relatively weak but market demand is strong.
“Hongmeng” high-end class to strengthen brand building. The company launched “Hongmeng” in May of this year
High-end classes bring together outstanding teachers to create a high-end teaching system for outstanding students. They mainly include segmented training teams and two levels of outstanding students. The introduction of high-end classes targets more of the target group to top students, which is conducive to the formation of a positive cycle of student sources and word of mouth. In the future, it may help optimize customer acquisition costs and increase customer unit prices.
1H20 gross margin declined due to the pandemic and the construction of new learning centers. In the first half of the year, the company's gross profit margin fell from 43.3% to 37.5%, mainly due to: 1) the opening of 27 new study centers in the first half of the year. In the early stages of the opening of new schools, revenue was relatively limited; 2) the online business layout during the pandemic also increased corresponding costs. Due to the impact of the epidemic, the company reduced offline marketing and promotion activities, and sales expenses decreased by 8% year on year; management expenses decreased 8.1% year on year, mainly due to related listing expenses recorded in the same period last year; R&D expenses increased 29% year on year, mainly for course development. Meanwhile, thanks to government subsidies and increased revenue from wealth management products, the company's net profit was 46 million, an increase of 38.4% over the previous year, and the company's net profit margin was 14.2%, an increase of about 3 percentage points over the previous year.