JIAFAET(300559) 长江证券·2024-11-19 02:28Investment Rating - The report maintains a "Buy" rating for Jiafa Education (300559 SZ) [8] Core Views - Jiafa Education's Q3 2024 financial performance showed significant declines with revenue of 338 million yuan, down 22 47% YoY, and net profit attributable to shareholders of 50 million yuan, down 56 62% YoY [2][6] - The company faces pressure from market and macroeconomic factors, with Q3 revenue dropping 40 67% YoY and net profit down 72 80% YoY [6] - Despite short-term challenges, the company is expected to benefit from AI-driven growth in smart education, with projected revenue of 671/861/1 077 million yuan and net profit of 140/185/231 million yuan for 2024-2026 [7] Business Overview - Jiafa Education is a leader in standardized examination site construction, focusing on smart examination and smart education businesses [2] - The company has expanded its smart education product lines, including English listening and speaking, physical education, and laboratory products, with AI-powered solutions gaining traction in the market [11] - Jiafa Education's business model has evolved from product sales to a diversified approach integrating solutions, operations, and leasing services, with a customer base expanding from G/B to C-end [11] Financial Performance - In Q3 2024, the company's operating cash flow was 11 million yuan, down 87 93% YoY, while gross margin improved by 3 77 percentage points to 56 19% [6] - Management expenses increased by 49 68% YoY to 64 32 million yuan in the first three quarters of 2024, partly due to employee stock ownership plan amortization [6] - The company's PE ratios for 2024-2026 are projected at 32/24/19 times, with EPS expected to grow from 0 35 yuan in 2024 to 0 58 yuan in 2026 [7][18] Industry and Market Position - As a pioneer in China's education informatization, Jiafa Education has established a strong brand in the smart examination sector [7] - The company's AI-powered physical education solution was deployed in 85 districts and counties across China, covering 300+ examination sites and 500 000+ students in 2024 [11] - A strategic cooperation agreement with Huawei was signed in September 2024 to jointly explore smart education development [11]