Summary of the Conference Call for Thinker Education Company Overview - Thinker Education anticipates a revenue growth rate of 20%-30% for 2025, despite challenges from the economic environment and parents' willingness to pay, maintaining an optimistic outlook on performance [2][4][5] - The company is focusing on expanding its presence in the Guangzhou market, increasing the number of campuses from 9 in 2024 to over 20 in 2025, with a primary focus on winter and spring courses [2][4][6] Key Points and Arguments - The international business of Thinker Education is currently small, contributing only a few million yuan to overall revenue, and is not expected to significantly impact the company [7] - The company is exploring online digital avatars and AI-related businesses, but these initiatives are still in the exploratory phase and will not involve large-scale investments at this time [8] - The competitive pressure in the education and training market is normalized, with the economic environment affecting parents' payment willingness; however, Thinker Education expects to maintain a growth rate of over 20% [9][10] - The summer class renewal rate has improved compared to previous years, indicating healthy regular business operations [11] Additional Important Insights - The company plans to recruit approximately 1,000 outstanding graduates from top universities, with a smooth recruitment process and plans for employee iteration [4] - The company has added about 100-200 teachers in high school due to the new dual holiday system, expecting significant growth in the fall [3][15] - The Guangzhou campus is actively processing school qualification approvals, and the overall progress is in line with expectations [12] - Future expansion into new cities, including K12 offline education, is not ruled out for next year, as the company aims for steady development [14] - The company has seen a stable operating situation without significant changes in profit guidance, despite market concerns due to fewer roadshows [13]

2024 年是双减政策实施的第三年，AI 技术迅速发展，教培行业面临着前所未有的变革。近日，多家教育上市公司纷纷发表企业财报，这些数据背后，展 示着中国教育行业在政策调整与技术革命的交织中迎来深度转型。各公司在面对市场变化和技术革新时采取了多元化的策略，从构建综合教育生态系统到 依托 AI 技术实现突破，再到通过差异化服务抢占市场份额，展现了行业的活力与创新。 01 业绩情况：亏损与盈利并存，分化中谋增长 | | k12教培上市公司业绩一览 | | | | --- | --- | --- | --- | | 证券名称 | 总市值 | 营收 | 净利润 | | 新东方 | 79.38亿美元 | 11.83 亿美元 | 1.26 亿美元 | | 好未来 | 55.08亿美元 | 6.10 亿美元 | 8,459.1万美元 | | 高途 | 7.61亿美元 | 13.89亿元 | -1.36亿元 | | 网易有道 | 10.42亿美元 | 1.836亿美元 | 1140万美元 | | 学大教育 | 64.59亿美元 | 27.86亿元 | 1.8亿元 | | 卓越教育 | 46.17亿港元 | 11.02 亿元 | ...

Financial Performance - For the fiscal year ending December 31, 2024, the company's total revenue increased by 49.4% to RMB 852.3 million, compared to RMB 570.6 million in 2023[9]. - The gross profit for the same period rose by 39.8% to RMB 333.4 million, up from RMB 238.6 million in the previous year[9]. - Net profit attributable to the company's owners surged by 69.4% to RMB 145.6 million, compared to RMB 86.0 million in 2023[9]. - Basic earnings per share rose by 71.2% to RMB 26.68, compared to RMB 15.58 in the previous year[10]. - The adjusted net profit for the year was RMB 175.7 million, a 62.7% increase from RMB 108.0 million in 2023[9]. - The operating profit for the year was reported at RMB 191.5 million, reflecting ongoing operational efficiency improvements[12]. - Profit before tax increased by 55.0% from RMB 116.7 million to RMB 181.0 million[28]. - Income tax expense rose by 10.0% from RMB 32.2 million to RMB 35.5 million due to an increase in taxable profits and withholding tax[29]. - Profit attributable to owners increased by 69.4% from RMB 86.0 million to RMB 145.6 million[30]. - Adjusted profit attributable to owners increased by 62.7% from RMB 107.999 million to RMB 175.716 million[31]. Revenue Sources and Growth - Revenue from competency courses grew from RMB 518.9 million to RMB 766.8 million, indicating a robust market for these offerings[12]. - The number of tutoring class hours increased significantly from 5,973,028 hours to 8,692,591 hours, reflecting strong demand for non-academic courses[12]. - The number of enrolled students for non-academic quality courses increased by 45.8% to 348,523, while tutoring course hours rose by 61.8% to 935,748 hours[19]. - For the fiscal year ending December 31, 2024, the company reported revenue and profit attributable to owners of approximately RMB 852.3 million and RMB 145.6 million, respectively, with about 90.0% of revenue coming from non-academic quality courses and others, and approximately 10.0% from tutoring courses[76]. Business Strategy and Expansion - The company plans to diversify its offerings and enhance service quality by leveraging artificial intelligence technology[8]. - The company aims to expand its revenue base through new initiatives, including educational tourism and international courses[8]. - The company plans to expand its business in Guangzhou, having received positive feedback from parents and students, and aims to diversify its offerings in quality education[14]. - The company has initiated new business opportunities, including educational tourism and international courses, to broaden its revenue base for long-term growth[14]. Regulatory Environment - The Ministry of Education issued the "Interim Measures for Administrative Penalties for Off-campus Training" on August 23, 2023, which will take effect on October 15, 2023, outlining penalties for illegal training activities[48]. - The new regulations specify that illegal off-campus training may result in penalties such as rectification orders, refunds, and fines for organizations operating without necessary permits[48]. - The Ministry of Education's notification on December 18, 2023, emphasizes the need to strengthen supervision and enforcement to prevent hidden variations in subject training and reduce the burden of off-campus training on students[48]. - The "Interim Measures" include provisions for administrative penalties related to pricing, fee collection, and pre-collection fund supervision for off-campus training institutions[48]. - The Ministry of Education has been actively working to regulate non-academic training institutions, ensuring compliance with standards and enhancing daily supervision[47]. Financial Position - Total assets as of December 31, 2024, amounted to RMB 1,327.4 million, with total liabilities of RMB 692.6 million, resulting in total equity of RMB 634.8 million[18]. - Total equity increased to RMB 634.8 million from RMB 453.4 million[37]. - Cash and cash equivalents increased by 7.9% from RMB 362.0 million to RMB 390.7 million[37]. - The company has bank borrowings of RMB 40.0 million as of December 31, 2024, compared to none in 2023[87]. Shareholder and Governance Matters - The board has proposed a final dividend of HKD 0.07 per share for the year ending December 31, 2024, compared to no dividend for the previous year[51]. - The company has established a compensation committee to review its compensation policies based on operational performance and market practices[93]. - The board consists of four executive directors and three independent non-executive directors, complying with listing rules regarding board composition[195]. - The company aims to maintain the current female member ratio on the board, with a long-term goal of achieving gender parity in board nominations and elections[198]. - Independent non-executive directors have confirmed their independence according to Listing Rule 3.13, and the company considers them all to be independent individuals[199]. Compliance and Risk Management - The company is committed to compliance with relevant laws and regulations, with no significant violations reported for the fiscal year ending December 31, 2024[82]. - The company will regularly disclose updates regarding compliance with foreign investment laws and any significant impacts on its operations and financial condition[173]. - The company has engaged an auditor to confirm compliance with the disclosure requirements of the listing rules regarding related party transactions[148]. Employee and Operational Metrics - As of December 31, 2024, the company employed 2,973 employees, an increase of 28.2% from 2,319 employees in 2023[44]. - Research and development expenses increased by 76.2% to RMB 26.5 million, primarily due to higher personnel costs related to developing teaching materials and market research for various quality courses[24]. Share Incentive Plans - The company has three active share incentive plans, including a share option plan that was approved on June 3, 2019[103]. - A total of 27,785,000 stock options were granted under the stock option plan, with an exercise price of HKD 1.62 per share[107]. - The share reward plan aims to retain and attract qualified participants by providing direct economic benefits and recognizing their contributions to the group's growth[125]. Related Party Transactions and Structured Contracts - The company has established multiple structured contracts with related parties, including exclusive operational and consulting agreements, to ensure economic benefits flow to the company[146]. - The structured contracts allow the company to retain most profits generated by the Chinese operating entities, with no dividends or distributions made to the owners of these entities[148]. - The company does not hold any equity in the Chinese operating entities but controls them through structured contracts to minimize potential conflicts with Chinese laws[153].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price not specified [5]. Core Insights - The company reported a revenue of 850 million RMB for 2024, representing a 49% year-on-year increase, and a net profit of 176 million RMB, which is a 63% increase [1]. - The growth in revenue is attributed to an increase in tutoring hours and operational efficiency improvements [1][2]. - The company is expanding its business in Guangzhou and has launched new educational tourism and international courses, aiming to diversify its revenue streams [2]. - Future revenue projections for 2025-2027 are adjusted to 1.18 billion RMB, 1.61 billion RMB, and 2.19 billion RMB respectively, with net profits expected to be 236 million RMB, 321 million RMB, and 433 million RMB [3]. Summary by Sections Financial Performance - In 2024, the company achieved a total revenue of 850 million RMB, with non-academic courses contributing 770 million RMB, and tutoring course revenue reaching 86 million RMB [1]. - The number of enrolled students increased to 350,000, with tutoring course hours totaling 8.69 million [1]. Business Development - The company is actively working on re-establishing its presence in the Guangzhou market, which has shown positive initial results [2]. - It aims to enhance its service offerings in various educational areas, including arts, sports, and logic training, to support balanced development for students [2]. Future Outlook - The company plans to leverage its brand influence and management expertise to explore new opportunities and expand its revenue base [2]. - Cost control measures will be strictly implemented to maintain healthy cash flow while enhancing service quality through technology and AI [2].

Investment Rating - The report maintains a "Buy" rating for the company with a target price not specified [5][13] Core Insights - The company reported a revenue of 850 million RMB for 2024, representing a 49% year-on-year increase, and a net profit of 176 million RMB, which is a 63% increase [1] - The growth in revenue is attributed to an increase in tutoring hours and operational efficiency improvements [1] - The company is expanding its business in Guangzhou and has launched new initiatives such as educational tourism and international courses, aiming for diversified growth [2] Financial Performance - For 2024, the company generated 770 million RMB from non-academic quality courses, a 48% increase, with 350,000 student enrollments, up 46% [1] - The tutoring course revenue reached 86 million RMB, a 65% increase, with 37,000 students enrolled, marking a 62% increase [1] - The adjusted net profit forecast for 2025-2027 is 236 million RMB, 321 million RMB, and 433 million RMB respectively [3] Future Outlook - The company plans to leverage its brand influence and management experience to explore new opportunities and expand its revenue base [2] - It aims to maintain a strong cash flow and improve service quality through technology and AI [2]

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 7.01 [7][8]. Core Views - The company reported a revenue of RMB 852 million for 2024, representing a year-on-year increase of 49.4%, and an adjusted net profit of RMB 176 million, up 62.7% year-on-year. Both revenue and profit align with the performance forecast [1][2]. - The company plans to restart dividend payments in 2024, with an expected gradual increase in the dividend payout ratio over the next three years, targeting approximately 25% in 2024 [1]. - The company is actively seizing opportunities in the Shenzhen market due to improved regional dynamics, continuously expanding its market share [2][3]. Summary by Sections Financial Performance - For 2024, the company achieved a revenue of RMB 852 million, a 49.4% increase year-on-year, and an adjusted net profit of RMB 176 million, a 62.7% increase year-on-year. The gross profit and adjusted net profit for 2024 were RMB 333 million and RMB 176 million, respectively, exceeding pre-"double reduction" levels [1][2]. - The company’s quality education revenue reached RMB 767 million, up 47.79% year-on-year, while tutoring course revenue grew 65.22% to RMB 86 million, driven mainly by an increase in class hours [2]. Market Expansion - The company has resumed its expansion in the Guangzhou market, opening nine new campuses by the end of 2024, with overall enrollment exceeding expectations. The focus will be on revenue and market share growth in the coming two to three years [3][4]. - The company plans to enhance its teaching staff by increasing the proportion of teachers with top-tier academic qualifications to over 85% and will strengthen its middle-tier capabilities to support business expansion [4]. Profit Forecast and Valuation - The profit forecast for 2025-2027 is adjusted slightly, with expected adjusted net profits of RMB 244 million, RMB 329 million, and RMB 424 million, reflecting increases of 5% and 7% for 2025 and 2026, respectively [5][12]. - The target price of HKD 7.01 is based on a 15x PE ratio for 2025, considering the company's relatively lower liquidity compared to comparable companies listed in the US and A-shares [5][12].

Group 1 - The core viewpoint of the articles highlights the significant growth in the financial performance of the company, with record high revenues and adjusted net profits for the fiscal year ending December 31, 2024 [1][2] - The total revenue for the year increased by 49.4% to RMB 852.3 million, marking a historical high for the company [1] - The adjusted net profit attributable to owners rose by 69.4% to RMB 145.6 million, driven by an increase in total tutoring hours and improved operational efficiency [1] Group 2 - The company has successfully developed a variety of non-academic courses, such as scientific literacy and logical thinking training, which have received strong demand and high recognition from students and parents [2] - The company is making progress in its strategic development in Guangdong Province, with plans to restart operations in Guangzhou, where courses have been well-received [2] - Looking ahead, the company aims to diversify its offerings, leverage its brand influence, and explore new opportunities in different fields, while enhancing service quality and operational efficiency through technology and artificial intelligence [2]

Financial Performance - The company's total revenue for the year ended December 31, 2024, increased by 49.4% to RMB 852.3 million from RMB 570.6 million in 2023[3] - Gross profit rose by 39.8% to RMB 333.4 million, compared to RMB 238.6 million in the previous year[3] - Net profit attributable to the company's owners increased by 69.4% to RMB 145.6 million, up from RMB 86.0 million in 2023[3] - Adjusted net profit attributable to the company's owners was RMB 175.7 million, reflecting a 62.7% increase from RMB 108.0 million in 2023[6] - Basic earnings per share rose by 71.2% to RMB 26.68, compared to RMB 15.58 in the previous year[3] - The company achieved an operating profit of RMB 191.5 million for the year, reflecting improved operational efficiency[16] - Operating profit increased to RMB 122,632,000, compared to RMB 191,546,000 in 2023, reflecting a decrease due to rising costs[43] - The profit attributable to the company's owners for 2024 was RMB 145,645,000, compared to RMB 85,988,000 in 2023, representing an increase of 69.5%[71] - Basic earnings per share for 2024 were RMB 26.68, up from RMB 15.58 in 2023, reflecting a growth of 71.1%[71] - Diluted earnings per share for 2024 were RMB 26.08, compared to RMB 15.42 in 2023, indicating an increase of 69.0%[74] Revenue Growth - Revenue from non-academic courses grew from RMB 518.9 million to RMB 766.8 million, demonstrating robust market demand[16] - The number of tutoring sessions increased from 5,973,028 to 8,692,591, indicating strong demand for non-academic courses[16] - The number of enrolled students increased by 47.2% to 386,006, with tutoring hours rising by 46.9% to 9,628,339 hours[21] - Total revenue increased by 49.4% to RMB 852.3 million for the year ended December 31, 2024, compared to RMB 570.6 million for the previous year[22] - The group reported total revenue of RMB 852,327 thousand for the year 2024, a significant increase of 49.3% compared to RMB 570,614 thousand in 2023[61] Expenses and Costs - The share-based compensation expense increased significantly by 270.1% to RMB 30.1 million from RMB 8.1 million in 2023[4] - Research and development expenses rose by 76.2% to RMB 26.5 million, primarily due to increased personnel costs related to the development of educational materials and curriculum products[22] - Financial costs increased by 75.6% to RMB 10.3 million, mainly due to higher interest expenses on lease liabilities and borrowings[24] - The group’s operating expenses for 2024 totaled RMB 481,107 thousand, a decrease of 30% from RMB 686,399 thousand in 2023[67] - The income tax expense for the year 2024 was RMB 35,451 thousand, compared to RMB 32,236 thousand in 2023, reflecting an increase of 9.3%[69] Strategic Initiatives - The company plans to expand its business in Guangdong Province and has initiated the relaunch of its operations in Guangzhou, which has received positive feedback from parents and students[18] - The company has launched educational travel services and international courses in July 2023, aiming to broaden its revenue base[18] - The company plans to continue expanding its market presence and investing in new technologies to enhance service offerings[48] - The company is investing $10 million in research and development for new technologies aimed at enhancing user experience[93] - The company plans to acquire a mixed-use building in Shenzhen for RMB 75 million to support ongoing expansion efforts[38] Cash Flow and Assets - Cash and cash equivalents rose by 7.9% to RMB 390.7 million from RMB 362.0 million year-over-year, primarily due to net cash inflow from operating activities[26] - Current assets increased to RMB 556.0 million, compared to RMB 497.1 million in 2023, with significant contributions from cash and bank deposits of RMB 392.4 million[26] - Non-current assets increased to RMB 771,384,000, compared to RMB 536,110,000 in 2023, showing a growth of 43.8%[45] - Total equity increased to RMB 634.8 million as of December 31, 2024, up from RMB 453.4 million in 2023, representing a growth of 40%[26] - The total value of right-of-use assets increased to RMB 351,831,000 in 2024 from RMB 200,586,000 in 2023, marking a growth of 75.5%[76] Compliance and Governance - The company maintained compliance with all applicable corporate governance codes as of December 31, 2024[85] - The group has not identified any breaches of structural contracts or non-compliance with measures to strengthen control over consolidated entities in China[55] Shareholder Returns - A final dividend of HKD 0.07 per share is proposed for the year ending December 31, 2024, compared to no dividend in 2023[36] - The proposed final dividend for 2024 is HKD 0.07 per share, amounting to HKD 39,541,000, compared to no dividend in 2023[79] - A share buyback program has been approved, with a budget of $5 million to enhance shareholder value[93] Market Trends and Future Outlook - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share by 2026[93] - Future guidance indicates an anticipated revenue growth of 20% for the upcoming fiscal year[93] - Management emphasizes the importance of adapting to market trends and consumer preferences to drive future growth[93]

Key Points Industry and Company Overview - **Company**: Skarlo Education - **Industry**: Education, specifically after-school tutoring and training - **Location**: Focus on Shenzhen and Guangdong Province, with plans to expand to Guangzhou Growth and Expansion - **Shenzhen Expansion**: Over 145 campuses in Shenzhen, with plans to open 10 more during the winter break, reaching 150-160 by the end of the year, a 40% increase. - **Guangzhou Expansion**: Re-entry into the Guangzhou market with ongoing campus selection and headquarters renovation. Expected to start operations by the end of the year or early next year. - **Course Performance**: High school courses saw a 50% increase in revenue, and configuration growth of over 30%. Winter courses are prepared and a large promotional event was held on November 11th. Business Strategy - **New Business Lines**: Plans to add international and study abroad programs, with one international campus in Futian and plans to open 1-2 more in Nanchang and Futian. - **Profitability**: Expected to maintain a 20% profit margin for the full year of 2024, with a slight decrease in the second half due to costs associated with re-entering the Guangzhou market and opening new campuses. Market and Competition - **Market Demand**: Strong demand for after-school tutoring and training, with a focus on middle and low-income families. - **Competition**: Industry remains fragmented, with both small independent institutions and large chains operating. Skarlo Education has a competitive advantage as a regulated chain institution. Policy and Regulations - **Policy Stability**: Stable policies in Guangdong Province, with higher barriers to entry for non-disciplinary training institutions. - **Beijing Policy**: Positive signal for the industry's healthy development, with detailed guidelines for the application of licenses and the division of responsibilities between city and district education bureaus. Financial Performance - **Revenue Growth**: Revenue growth of about 2 percentage points compared to last year, with an increase of 5 percentage points announced, but slightly lower due to discounts for early enrollment or multiple subject enrollment. - **Profitability**: Profit margin in the first half of the year was stable compared to the same period last year, but slightly lower in the second half due to increased costs associated with re-entering the Guangzhou market and opening new campuses. Future Outlook - **Guangzhou Market**: Expected to start operations in January 2025, with a focus on full-grade, full-subject experience classes and high school B classes. Plans to expand the Guangzhou market over one year and contribute to overall business growth from 2026 onwards. - **Long-term Growth**: Focus on expanding the Guangzhou market, improving product and teaching quality, and consolidating and expanding the Greater Bay Area market.

Summary of Conference Call Company and Industry Overview - The conference call involved a discussion about the company "思考乐" (Thinker Education) and its operations in the K-12 education sector, particularly focusing on the competitive landscape in Shenzhen and Guangzhou [1][2][3]. Key Points and Arguments 1. **Expansion Plans**: The company currently operates over 145 locations in Shenzhen and plans to open approximately 10 new locations during the winter break, aiming for a total of 150-160 locations by the end of 2024, representing over 40% growth compared to the previous year [1][2]. 2. **Market Recovery in Guangzhou**: The company is preparing to re-enter the Guangzhou market by the end of this year, with site selection and renovations already underway [1][2]. 3. **Course Performance**: The company reported over 50% growth in high school tuition collections year-on-year, with overall course revenue growth exceeding 30% [2][4]. 4. **Competitive Landscape**: The education market in Guangdong is described as stable, with a mix of established players and new entrants. The company is observing changes in parental spending behavior due to economic conditions [3][4][8]. 5. **Regulatory Environment**: Recent policy changes in Beijing regarding private education are seen as positive for the industry, promoting healthy and orderly development [6][7]. 6. **Demand Trends**: There is a growing demand for educational services, particularly among students facing high school entrance exams, with an expected increase in the number of students participating in training programs [9][10]. 7. **High School Segment Growth**: The high school segment is projected to contribute 18-20% of total revenue in 2024, with expectations to exceed 20% in subsequent years [19]. 8. **Financial Health**: The company maintains a healthy financial position, with over 500 million to 600 million in cash reserves, and is considering dividend distributions if conditions allow [19][20]. 9. **Future Outlook**: The company aims to strengthen its presence in Guangzhou and enhance its service offerings, leveraging its experienced team to capture market share [21][22]. Additional Important Insights - **Pricing Strategy**: The average course price has increased by approximately 2% year-on-year, with discounts offered for early registrations and multi-course enrollments [12]. - **Operational Efficiency**: The company is focusing on increasing the capacity of existing locations while also expanding its network, indicating a balanced growth strategy [10][11]. - **Impact of Small Institutions**: The presence of smaller, unregulated institutions (referred to as "小黑班") is acknowledged, but the company believes its compliance and quality of service will attract parents back to formal institutions [16][17]. This summary encapsulates the key discussions and insights from the conference call, highlighting the company's strategic direction, market dynamics, and financial health.