But'one(SH:600455) Minsheng Securities·2025-09-25 05:24Investment Rating - The report gives a "Cautious Recommendation" rating for the company [6]. Core Viewpoints - The company has transformed into the "first stock in higher education," with its higher education business becoming the core revenue source, contributing significantly to its financial stability [1][4]. - The independent college transformation is underway, with good enrollment prospects due to high tuition fees and a favorable market environment [2][4]. - The company is strategically focused on its higher education business, with future growth expected from the ongoing construction of the second phase of the urban college project [2][3]. Company Overview - The company, originally engaged in application software and industry solutions, has evolved into a higher education provider through its partnership with Xi'an Jiaotong University, establishing the urban college in 2005 [1][10]. - The urban college has approximately 11,800 students and offers a diverse range of programs, with a strong emphasis on engineering and management disciplines [1][10]. - The company is actively advancing the second phase of the urban college project, which will increase enrollment capacity and improve educational offerings [1][10]. Industry Analysis - The independent college sector has seen significant growth, with over 106 independent colleges undergoing transformation from 2020 to 2025, primarily converting to private institutions [2][30]. - The high number of college entrance exam candidates in recent years supports the demand for independent colleges, which typically charge higher tuition fees [34]. - The independent colleges benefit from their association with well-known public universities, enhancing their attractiveness to prospective students [34]. Financial Analysis - The company has a relatively high asset-liability ratio, with figures of 60.86%, 63.94%, and 61.23% from 2023 to 2025 [3][51]. - The cash flow situation is strong, with a cash collection ratio exceeding 100% in recent years, indicating effective cash management [3][53]. - Profitability is improving, with gross margins around 51.55% to 52.94% and net margins between 12.19% and 16.28% from 2022 to 2025 [3][19]. Earnings Forecast and Investment Suggestions - Revenue projections for 2025-2027 are estimated at 3.13 billion, 3.38 billion, and 3.61 billion yuan, with corresponding EPS of 0.54, 0.63, and 0.69 yuan [4][5]. - The company is expected to maintain stable growth in its higher education business, supported by enrollment increases and tuition hikes [4][48].