Investment Rating - The investment rating for the company is "Buy" with a target price set based on a total market capitalization of HKD 56.21 billion [2]. Core Views - The company's performance in H1 2024 exceeded market expectations, with revenue, net profit attributable to shareholders, and adjusted net profit showing year-on-year growth of 1.6%, 33.2%, and 57.9% respectively [2]. - The increase in net profit was primarily driven by improved gross margins and a reduction in expense ratios, particularly in sales and costs [2][3]. - The company is expected to continue outperforming in the short term due to effective cost control, with a gradual recovery in long-term student enrollment anticipated as strategies normalize [5]. Summary by Sections Financial Performance - In H1 2024, the company reported revenues of HKD 1.983 billion, net profit of HKD 272 million, and adjusted net profit of HKD 278 million, reflecting significant growth compared to the previous year [2]. - The gross margin improved to 53.0%, an increase of 1.9 percentage points year-on-year, attributed to cost reductions in teaching-related consumables and rental expenses [4]. - The net profit margin rose to 13.7%, up 3.3 percentage points year-on-year, with a notable decrease in sales expenses due to better control over advertising costs [4]. Business Segments - Revenue growth varied across business segments, with notable increases in automotive services and beauty sectors, while culinary and IT segments faced challenges [3]. - The average training participants in various segments showed mixed results, with a decline in long-term students primarily due to the lingering effects of the pandemic [3]. - The average transaction price for automotive services increased significantly, indicating a shift towards higher-value enrollments [3]. Future Outlook - The company anticipates continued growth in the automotive and beauty sectors, while the culinary segment is expected to recover gradually [5]. - Adjustments to revenue forecasts for 2024, 2025, and 2026 reflect a more conservative outlook, with expected revenues of HKD 41.5 billion, HKD 44.1 billion, and HKD 48.4 billion respectively [5]. - The earnings per share (EPS) estimates have been revised upwards, projecting HKD 0.23, HKD 0.27, and HKD 0.33 for the next three years [5].
中国东方教育：业绩超预期，降本增效落地