Action Education(SH:605098) EBSCN·2025-10-23 08:45Investment Rating - The report maintains a "Buy" rating for the company, indicating expected returns exceeding the market benchmark by more than 15% over the next 6-12 months [5]. Core Insights - The company achieved a revenue of 570 million yuan in the first three quarters of 2025, a year-on-year increase of 0.5%, with a net profit attributable to shareholders of 210 million yuan, up 10.4% year-on-year [1]. - In Q3 2025, the company reported a revenue of 220 million yuan, representing a significant year-on-year growth of 27.9%, and a net profit of 80 million yuan, up 42.8% year-on-year [1]. - The improvement in performance is attributed to a recovery in enrollment rates and a strong order backlog, with contract liabilities amounting to 1.048 billion yuan as of September 2025, ensuring future revenue growth [1]. Summary by Sections Financial Performance - The gross profit margins for the first three quarters of 2025 and Q3 2025 were 78.54% and 80.16%, respectively, reflecting an increase of 2.63 and 4.78 percentage points year-on-year [2]. - The sales expense ratio decreased to 24.55% for the first three quarters and 24.63% for Q3, down 0.43 and 4.77 percentage points year-on-year, primarily due to a high expense base from the previous year [2]. - The net profit margin reached 38.38% for the first three quarters and 38.53% for Q3, an increase of 3.43 and 4.44 percentage points year-on-year [2]. Growth Drivers - The company is advancing its AI strategy, which has begun to show positive effects, particularly in improving employee retention and sales performance [3]. - The "Hundred Schools Plan," initiated in February 2025, aims to expand the sales network to 100 cities over the next 3-5 years, with significant progress already made [3]. Profit Forecast and Valuation - The projected net profits for 2025-2027 are 294 million, 334 million, and 371 million yuan, respectively, with corresponding price-to-earnings ratios of 16x, 14x, and 13x [3]. - The company maintains a high dividend payout ratio, proposing a cash dividend of 0.5 yuan per share, which accounts for 71.5% of Q3 2025 net profit [2].