SPM(SH:601900) Huachuang Securities·2024-03-09 16:00Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 21.6 CNY [8][293]. Core Viewpoints - The company's main business logic remains stable, with a strong safety cushion due to a large and growing student population and strong consumer spending power in Guangdong [108][109]. - The company has significant potential for external growth through acquisitions, having recently acquired Guangzhou Education Bookstore and other publishers, which are expected to contribute to profit increments [239][240]. - The dividend level has been consistently increasing, with a forecasted further increase due to a strong cash position [263][278]. Summary by Sections 1. Main Business Stability - The existing business has a high safety cushion due to the large population and strong consumption capacity in Guangdong, which is expected to drive growth in educational materials [108][109]. - The forecast indicates that the number of students in Guangdong will continue to grow, supporting the company's core business [109]. - The company has a strong track record of increasing dividends, with a cash dividend rate rising from around 30% to 45% in recent years, indicating room for further increases [263][278]. 2. New Business Development - The company is actively expanding into new business areas, particularly in AI and education, demonstrating a strong capability for product iteration and revenue generation [243][266]. - The company has launched several AI-based educational products and continues to enhance their functionalities, which have already started generating income [243][266]. - The K12 education sector is seeing a normalization of regulatory oversight, with a focus on after-school services and quality education, which aligns with the company's strategic direction [267][283]. 3. External Growth Opportunities - The company has significant room for further integration of distribution channels and publishing resources, particularly in the Guangdong region, which could lead to additional profit increments [239][240]. - The integration of educational bookstores and publishing houses is expected to enhance the company's market competitiveness and operational efficiency [239][240]. - The company is also exploring opportunities in the children's programming education sector through a joint venture, which is anticipated to contribute to revenue growth [371].