Investment Rating - The report maintains a "Buy" rating for the company, with a target price not specified [7]. Core Insights - The company has announced a dividend plan to gradually increase the payout ratio to 50%, 60%, and 70% of the net profit attributable to shareholders over the next three fiscal years [1]. - The board believes that the dividend plan aligns with the best interests of the company and its shareholders, responding to market demands and protecting investor rights while maintaining financial health for sustainable development [1]. - The company plans to buy back 103,000 shares as part of its restricted stock unit plan, indicating confidence in its business outlook and addressing undervaluation concerns [2]. - The expected increase in dividends is anticipated to enhance investor benefits and boost confidence, especially given the attractive dividend yield in a low valuation environment [3]. - The company has launched a new youth programming education brand, i01, aimed at aligning with new educational standards and fostering talent in technology and innovation [4]. Financial Projections - The company forecasts revenues of 800 million RMB, 1.53 billion RMB, and 1.83 billion RMB for the fiscal years 2024 to 2026, respectively [5]. - Adjusted net profits are projected to be 180 million RMB, 280 million RMB, and 340 million RMB for the same periods [5]. - Earnings per share (EPS) are expected to be 0.21 RMB, 0.33 RMB, and 0.40 RMB for 2024, 2025, and 2026, respectively, with price-to-earnings (PE) ratios of 17x, 11x, and 9x [5].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 5.60, indicating a potential upside of 94.4% from the current price of HKD 2.88 [1]. Core Insights - The company has shown strong revenue growth driven by quality education services, with total revenue for FY24H1 reaching HKD 3.17 billion, a year-on-year increase of 68.1% [1]. - The adjusted net profit for FY24H1 was HKD 0.54 billion, reflecting a significant increase of 168.9% year-on-year [1]. - The company's contract liabilities have increased by 183.8% year-on-year, providing a solid foundation for future financial performance [1]. - The quality education segment has become the main growth engine, contributing HKD 1.23 billion in revenue, a growth of 31.9% year-on-year [1]. - The company has doubled its employee count to 1,785, supporting its rapid growth [1]. Financial Performance Overview - For FY24H1, the company reported a gross profit margin of 44.96%, an increase of 8.0 percentage points year-on-year [1]. - The operating profit margin improved significantly, with net profit margin rising to 23.4% from 17.2% year-on-year [1]. - The company expects revenue to reach HKD 10.91 billion in FY24, with a year-on-year growth of 123% [1]. - Forecasted net profit for FY24 is projected at HKD 185.2 million, with continued growth expected in subsequent years [2]. Business Strategy and Development - The company is actively optimizing its quality education courses and has successfully obtained non-profit school operation licenses in Guangzhou [1]. - New non-academic products have been launched, including "Fun Little Reporter" and "Literary Aesthetics," aligning with educational policies [1]. - The company is focused on compliance and transformation in response to regulatory changes, aiming to return to normal operational development [1]. Market Position and Outlook - The company is positioned as a leader in the education and training industry in South China, with expectations of continued market share growth [1]. - The report anticipates that the company will gradually return to a normal growth trajectory, supported by its strategic initiatives and market demand [1].

Financial Performance - Revenue for the first half of 2024 reached RMB 317.4 million, representing a 68.1% increase compared to RMB 188.9 million in the same period of 2023[7] - Gross profit for the first half of 2024 was RMB 142.7 million, up 104.5% from RMB 69.8 million in the first half of 2023[7] - Net profit for the first half of 2024 increased to RMB 54.4 million, a significant rise of 170.0% from RMB 20.2 million in the same period last year[7] - Adjusted net profit for the first half of 2024 was RMB 54.4 million, reflecting a 168.9% increase compared to RMB 20.2 million in the first half of 2023[7] - Total revenue increased by 68.1% from approximately RMB 188.9 million in the first half of 2023 to approximately RMB 317.4 million in the reporting period, primarily driven by the growth in quality education services[24] - Gross profit rose by 104.5% from approximately RMB 69.8 million in the first half of 2023 to approximately RMB 142.7 million, with gross margin increasing from 36.9% to 45.0%[26] - Profit for the reporting period increased by 170.0% from approximately RMB 20.2 million in the first half of 2023 to approximately RMB 54.4 million[34] - Basic earnings per share increased to RMB 7.25 from RMB 2.78, reflecting a significant growth in profitability[72] Contract Liabilities and Assets - The company achieved a contract liability of approximately RMB 458.4 million, which is a 116.5% increase year-on-year[8] - Contract liabilities increased by 116.5% to approximately RMB 458.4 million as of June 30, 2024, compared to RMB 211.8 million on December 31, 2023, primarily due to business growth[38] - The group held financial assets including debt investments of approximately RMB 70.9 million and equity investments of approximately RMB 33.3 million as of June 30, 2024[41] - The total carrying value of the group's interests in joint ventures was RMB 8,886,000, slightly up from RMB 8,871,000[108] - The total assets were RMB 137,914,000, up from RMB 115,753,000, reflecting a growth of approximately 19.1%[115] Employee and Management Initiatives - The company implemented employee incentives through equity incentives to boost staff motivation and engagement[8] - The proportion of employees from prestigious universities significantly increased due to the company's recruitment efforts, including a mentorship program for new hires[15] - The company granted restricted stock units to several employees on April 30, 2024, enhancing employee loyalty and motivation, promoting shared growth and long-term development[15] - Total employee costs for the period amounted to RMB 131,738,000, up from RMB 95,219,000, indicating a rise of 38.3%[92] - The total compensation for directors and key management personnel for the six months ended June 30, 2024, was RMB 5,438,000, compared to RMB 4,025,000 for the same period in 2023, representing an increase of approximately 35.2%[133] Compliance and Governance - The company maintained compliance with regulatory requirements while achieving significant growth in the first half of 2024[8] - The audit committee has reviewed the interim financial information and confirmed compliance with applicable accounting standards[55] - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange listing rules[51] - The company is committed to compliance and will optimize course content to meet national education policies while ensuring high-quality teaching resources[17] Strategic Initiatives and Market Focus - The launch of the "Kunpeng Youth Growth Camp Project" marked a successful transition to quality education, gaining recognition from parents and students[8] - The company actively embraced AI technology to enhance organizational efficiency for students, teachers, and management teams[8] - The company aims to deepen quality education by developing diverse and interactive courses that align with national expectations and enhance students' core competencies[18] - The company plans to focus on the Greater Bay Area, particularly Shenzhen and Foshan, to meet the growing demand for quality education services driven by economic development and rising parental investment[19] Financial Position and Cash Flow - Cash and cash equivalents as of June 30, 2024, amounted to approximately RMB 495.7 million[37] - Current ratio decreased to approximately 1.09 as of June 30, 2024, down from 1.25 on December 31, 2023[39] - The company’s cash and cash equivalents significantly increased to RMB 495,735 thousand from RMB 281,928 thousand, reflecting a growth of approximately 75.9%[73] - The net cash generated from operating activities for the six months ended June 30, 2024, was RMB 328,545 thousand, compared to RMB 84,059 thousand for the same period in 2023, reflecting a significant increase of approximately 290.5%[76] Shareholder Information - As of June 30, 2024, the company has a total of 847,221,000 shares issued[60] - Major shareholders include JTC Trustees (BVI) Limited holding 53.93% of the issued shares, and Elite Education Investment Co. Ltd. with 20.20%[62] - The company has retained 27,292,396 existing shares under the restricted share unit plan, with an additional 43,540,000 shares to be issued[64] - The company has no controlling shareholder or ultimate controller as of June 30, 2024, due to the absence of shareholders with majority voting rights[78] Investment and Acquisitions - The company is actively pursuing a license for non-subject profit-making education in Guangzhou, enhancing business sustainability[9] - The group has developed a complete learning system for programming education, covering hardware and software from robotics to Python and C++[12] - The company has entered into a series of agreements to change the registered shareholders of its subsidiary, enhancing internal control and operational efficiency[66] Impairment and Losses - The group recorded a fair value loss of approximately RMB 84.9 million related to financial assets due to ongoing litigation with Minsheng Trust[45] - The group confirmed a net impairment loss of approximately RMB 35.6 million related to overdue investments with Zhongcheng Construction Group[46] - The company recognized a net impairment loss of RMB (530,000) under the expected credit loss model, a decrease from RMB 5,580,000 in the previous year[72] Fair Value Measurements - The fair value of financial assets measured at fair value through profit or loss as of June 30, 2024, totaled RMB 71,866,000, with RMB 25,892,000 from listed equity investments and RMB 45,974,000 from debt instruments[136] - The company closely collaborates with qualified external valuers to establish applicable valuation techniques and input data for fair value assessments[134]

Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [1] Core Views - In the first half of 2024, the company achieved revenue of 317 million RMB, representing a year-on-year growth of 68.1%, and a net profit attributable to shareholders of 55 million RMB, up 160.7% year-on-year [1] - The company has made significant progress in its transformation towards quality education, with contract liabilities increasing by 116.5% year-on-year to 458 million RMB, indicating strong revenue conversion potential for the full year [1] - The company is enhancing organizational efficiency through AI investments, resulting in a management expense ratio of 12.9%, a decrease of 2.26 percentage points year-on-year [1] - A stock incentive plan was implemented, granting 58 million restricted shares to 552 employees, which is expected to boost employee engagement and long-term company growth [1] - Revenue forecasts for 2024-2026 are projected at 1.01 billion RMB, 1.80 billion RMB, and 2.50 billion RMB, with net profits of 176 million RMB, 278 million RMB, and 374 million RMB respectively, indicating a strong growth trajectory [1] Financial Summary - For 2024E, total revenue is expected to reach 1,015 million RMB, with a growth rate of 107.4% compared to 2023A [4] - The net profit attributable to shareholders is projected to be 176 million RMB in 2024E, reflecting a growth rate of 92.5% [4] - The company's total assets are forecasted to increase from 1,046 million RMB in 2023A to 1,259 million RMB in 2024E [5]

股 票 研 究 证 券 研 究 报 告 利润端超预期，关注旺季数据兑现 卓越教育集团(3978) [Table_Industry] 教育产业 [Table_Invest] 评级： 增持 ——卓越教育集团 24H1 业绩点评 | --- | --- | --- | |----------|-------------------------------------|------------------------------| | | | | | | [table_Authors] 刘越男 ( 分析师 ) | 庄子童 ( 分析师 ) | | | 021-38677706 | 021-38032683 | | | liuyuenan@gtjas.com | zhuangzitong026312@gtjas.com | | 登记编号 | S0880516030003 | S0880524070002 | 本报告导读： 收入端符合预期，利润端超预期，竞争格局改善下龙头仍有望受益，合同负债高速 增长为 24H2 业绩提供保障，关注旺季业绩兑现情况。 投资要点： [Table_Summary] 投资建议：考虑到竞争格局改善 ...

Investment Rating - The investment rating for the company is "Buy" with a target price set at 2.79 HKD, maintaining the rating for the next six months [3]. Core Insights - The company reported a significant increase in revenue and net profit for the first half of 2024, with revenue reaching 320 million RMB, a year-on-year increase of 68.1%, and net profit of 50 million RMB, up 160.7% [3]. - The growth in performance is attributed to a low base from the previous year and successful product transformation that has been well-received by parents and students [3][4]. - The company has been proactive in complying with educational policies, achieving zero penalties during inspections and actively pursuing licenses for non-academic programs, which enhances its sustainable development [4][6]. Financial Performance - For the first half of 2024, the company reported a gross margin of 45.0%, an increase of 8.0 percentage points, and a net margin of 16.5%, up 6.0 percentage points [3]. - The company’s contract liabilities reached 460 million RMB, reflecting a year-on-year increase of 116.5% [3]. Business Segmentation - In terms of business segments, the full-time review income was 120 million RMB, up 19.7%, while tutoring projects generated 80 million RMB, a 31.9% increase. The quality education segment saw remarkable growth, with revenue of 120 million RMB, up 320.9% [3]. Future Outlook - The company has revised its earnings forecast upwards, projecting revenues of 880 million RMB, 1.53 billion RMB, and 1.83 billion RMB for 2024-2026, respectively [6]. - The adjusted net profits for the same period are expected to be 180 million RMB, 280 million RMB, and 340 million RMB [6].

Introduction - **Industry/Company**: Not specified - **Key Points**: - Welcome message from the host, Huang Kaolin, Investor Relations Deputy Director - Introduction of the management guest: Tang Junjun, Chairman and Group President - **Document ID**: [1]

Summary of Conference Call Company and Industry Involved - The conference call involves a company represented by its Chairman and Group President, Mr. Tang Junxing, and is hosted by the Vice President of Investor Relations, Huang Kailin [1]. Core Points and Arguments - The meeting welcomes both in-person and online attendees, indicating a broad interest in the company's performance and future outlook [1]. Other Important but Possibly Overlooked Content - The presence of familiar attendees suggests a strong relationship with investors and stakeholders, which may indicate confidence in the company's communication strategy [1].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容而產生或 因倚賴該等內容而引致的任何損失承擔任何責任。 China Beststudy Education Group 卓 越 教 育 集 團 * （於 開 曼 群 島 註 冊 成 立 的 有 限 公 司） （股 份 代 號：3978） 截至2024年6月30日止六個月 中期業績公告 | --- | --- | --- | --- | |------------|---------------------------|---------------------------|--------| | | | | | | | | | | | | 截至 | 6 月 30 日止六個月 | | | | 2024 年 | 2023 年 | 變動 | | | 人民幣千元 （未經審核） | 人民幣千元 （未經審核） | % | | 收益 | 317,444 | 188,860 | 68.1% | | 毛利 | 142,723 | 69,780 | 104.5% | | 純利 ...

Investment Rating - The report gives a **Buy** rating for the company, with a target price of **6.18 HKD** for 2025, based on a 25X PE valuation [75] Core Views - The company is a leading K12 education provider in Guangdong, with strong growth potential in the post-"Double Reduction" policy environment [75] - The company has successfully transitioned to a focus on **quality education**, **high school tutoring**, and **full-time exam preparation**, achieving balanced development across these three segments [75] - The company's market share in Guangzhou is less than 2%, indicating significant room for growth [48] - The company's revenue is expected to grow at a CAGR of **8.7%** in Guangzhou and **13.6%** in Shenzhen from 2023 to 2028, with the combined K12 tutoring market size projected to exceed **130 billion RMB** by 2028 [48][19] Market and Industry Analysis - The "Double Reduction" policy has led to a significant reduction in the number of offline and online subject-based tutoring institutions, with a **96% reduction** in offline institutions and an **87.1% reduction** in online institutions [51] - The policy has also mandated that all subject-based tutoring institutions for compulsory education must register as **non-profit entities** [1][51] - The company has leveraged its strong reputation and low marketing costs to rapidly expand in the quality education sector, with a **5.16% sales expense ratio** in 2023, one of the lowest in the industry [43] Company Strategy and Competitive Advantages - The company has capitalized on its **strong Chinese language teaching advantage**, transitioning its popular Chinese language courses into non-subject-based quality education products such as "Fun Little Journalist," "Dida Literature," and "Literary Aesthetic Education" [15] - The company has developed a comprehensive teacher training system, including the "Fuguang Plan" and "Xingyao Plan," to enhance teacher skills and retention [29][30] - The company is actively embracing **AI technology** to improve teaching efficiency, with R&D expenses growing at a CAGR of **14.2%** from 2015 to 2021 [63] Financial Performance and Projections - The company's revenue in 2023 was **506 million RMB**, with a net profit of **90 million RMB**, representing a **66.2% YoY growth** [80] - Revenue is expected to grow to **663 million RMB** in 2024, **860 million RMB** in 2025, and **1.109 billion RMB** in 2026, with net profit growing to **122 million RMB**, **167 million RMB**, and **226 million RMB** respectively [75] - The company's **quality education segment** is expected to grow at a CAGR of **49%** from 2024 to 2026, contributing **45 million RMB**, **69 million RMB**, and **101 million RMB** to net profit respectively [110] Regional Market Potential - Guangzhou and Shenzhen are experiencing **increasing demand** for K12 tutoring, driven by rising middle and high school enrollment numbers [107] - The company is well-positioned to benefit from the **unified provincial high school entrance exam** in Guangdong, which will allow for standardized teaching materials and easier expansion into other cities [50] Risks and Challenges - The company faces risks related to **market competition**, **expansion delays**, and **potential tuition fee increases** that may not meet expectations [119] - There is also a risk of **management and teacher turnover**, which could impact the company's growth and operational efficiency [119]