Investment Rating and Core Views - The report initiates coverage on Fenbi (02469 HK) with a "Buy" rating and a target price of HKD 5 93, based on a 20x PE multiple for 2024 [3][9] - Fenbi is recognized as a leading player in the online public examination training sector, with a strong brand and a proven OMO (Online-Merge-Offline) model that enhances efficiency and profitability [2][3] - The company's adjusted net profit turned positive in 2022, with a significant increase of 134% YoY to RMB 450 million in 2023, and the adjusted net profit margin improved to 14 7% [2] Financial Performance and Projections - Fenbi's revenue grew by 7 5% YoY to RMB 3 02 billion in 2023, driven by the recovery in public examination training demand and the optimization of its OMO model [2][22] - The company's small-class OMO model contributed 55% of total revenue in 2023, with a 16% YoY growth, and is expected to further drive profitability [2][24] - For 2024-2026, the report forecasts Fenbi's net profit to be RMB 570 million, RMB 750 million, and RMB 920 million, respectively, with adjusted net profit of RMB 630 million, RMB 780 million, and RMB 950 million [3][9] Industry Outlook and Competitive Position - The public examination training industry is expected to grow at a CAGR of 9 3% from 2023 to 2026, driven by factors such as increasing graduate numbers, strong demand for public sector jobs, and the retirement of the baby boomer generation [2][29] - Fenbi holds a 6 9% market share in the public examination training industry, ranking second among the top three players, and is expected to maintain its leading position due to its strong brand and innovative OMO model [2][43] - The industry is characterized by a three-player dominance, with Fenbi, Zhonggong Education, and Huatu Education being the key players, and the competition is expected to remain rational with a focus on profitability and pass rates [43][44] Business Model and Competitive Advantages - Fenbi's OMO model combines online and offline resources, leveraging its strong online platform to reduce costs and expand its reach, while maintaining high-quality offline interactions for students [2][52] - The company's small-class OMO model has shown significant efficiency improvements, with a 31% YoY increase in revenue per teacher to RMB 940,000 in 2023, and a reduction in the number of teachers by 18% [55] - Fenbi's AI-driven technologies, such as automated essay grading and personalized learning recommendations, have enhanced teaching efficiency and reduced operational costs, contributing to the company's profitability [60][62] Growth Drivers and Strategic Focus - Fenbi's growth is driven by its focus on small-class OMO courses, which are expected to see a 17% YoY increase in student numbers in 2024, and a 6% YoY increase in average tuition fees [7] - The company plans to further optimize its OMO model and expand its small-class offerings, with a target to increase the gross margin of small-class courses to 57% by 2026 [7] - Fenbi's strong brand reputation, high pass rates, and efficient cost structure are expected to support its long-term growth and market leadership in the public examination training industry [2][45]
在线公考龙头，精品小班OMO模式提效