HUATU CENDES(SZ:300492) Minsheng Securities·2024-08-31 15:36Investment Rating - The report maintains a "Recommended" rating for the company, with a target price of 75.52 CNY [3]. Core Insights - The company reported a significant increase in revenue and profitability in the first half of 2024, achieving a revenue of 1.506 billion CNY, a year-on-year increase of 4,601.26%, and a net profit attributable to shareholders of 122 million CNY, marking a turnaround from losses [1]. - The training business has enhanced the company's profitability, with a gross margin of 56.54% in H1 2024, up 36.25 percentage points year-on-year, driven by effective cost control and management optimization [1]. - The company has established over 500 branches nationwide for non-degree training, contributing to a total training revenue of 1.488 billion CNY in H1 2024, with a gross margin of 57.31% [1]. - Contract liabilities for non-degree training have increased significantly, reaching 756 million CNY as of June 30, 2024, a growth of 227.89% compared to the end of 2023, indicating strong future revenue potential [1]. - The company is expected to see continued profit growth, with projected net profits of 249 million CNY, 509 million CNY, and 733 million CNY for 2024, 2025, and 2026 respectively, corresponding to PE ratios of 43X, 21X, and 14X based on the closing price on August 30 [1][2]. Summary by Sections Financial Performance - In H1 2024, the company achieved a revenue of 1.506 billion CNY and a net profit of 122 million CNY, with a net profit margin of 8.10% [1]. - The gross margin for Q2 2024 was reported at 57.24%, reflecting a year-on-year increase of 32.57 percentage points [1]. - The company’s revenue is projected to grow significantly, with estimates of 2.782 billion CNY in 2024, 3.477 billion CNY in 2025, and 4.208 billion CNY in 2026 [2][4]. Business Development - The non-degree training segment has been a key growth driver, with a total of 19,000 students trained and a focus on cost management leading to a gross margin of 57.31% [1]. - The company has implemented a "staged payment" model for courses, allowing students to pay part of the fee upfront and the remainder upon passing exams, which is expected to enhance cash flow [1]. Future Outlook - The company is positioned to benefit from the ongoing demand for training services, with a strong pipeline of contract liabilities that are expected to convert into revenue as courses are delivered [1]. - The strategic partnership with Huatu Education is anticipated to further bolster the company's market position and profitability in the public examination training sector [1].