Action Education(SH:605098) HUAXI Securities·2025-10-22 13:12Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown significant growth in Q3 2025, with revenue, net profit, and net profit excluding non-recurring items increasing by 27.93%, 42.78%, and 62.25% year-on-year, respectively [2] - The increase in performance is attributed to a low base in Q3 2024, improved customer confidence post-tariff implementation, and strategic focus on specific regions [2][3] - The company plans to distribute a cash dividend of 0.5 yuan per share, resulting in a payout ratio of 71.49% and a dividend yield of 5.01% [2] Financial Performance Summary - Q3 2025 revenue reached 2.22 billion yuan, with a year-on-year growth of 27.93%, while the cash flow from operating activities was 1.56 billion yuan, reflecting a decline of 17.2% year-on-year [2][3] - For the first three quarters of 2025, the company reported revenue of 5.65 billion yuan, net profit of 2.15 billion yuan, and cash flow from operating activities of 1.56 billion yuan, with respective year-on-year growth rates of 0.52%, 10.39%, and a decline of 17.2% [2] - The gross margin and net margin for Q3 2025 were 80.2% and 37.6%, showing improvements of 4.8 and 3.9 percentage points year-on-year [3] Investment Recommendations - Short-term outlook indicates a significant increase in cash flow in Q3 2025, ensuring future growth, although Q4 may face high base effects [4] - Long-term strategies include enhancing team performance and expanding customer reach through initiatives like the "Hundred Schools Plan" [4] - Adjusted revenue forecasts for 2025-2027 are lowered to 7.93 billion, 8.97 billion, and 10.16 billion yuan, while net profit forecasts are raised to 3.01 billion, 3.43 billion, and 3.90 billion yuan for the same period [4] - The projected earnings per share (EPS) for 2025-2027 are adjusted to 2.53, 2.88, and 3.27 yuan, with corresponding price-to-earnings (PE) ratios of 16, 14, and 12 times [4]