Investment Rating - The report maintains a "Cautious Recommendation" rating for the company [6]. Core Views - The company achieved a revenue of 1.23 billion yuan in 2024, representing a year-on-year growth of 27.32%, while the net profit attributable to shareholders was -49 million yuan. In Q1 2025, the revenue was 309 million yuan, with a year-on-year growth of 10.78%, and a net profit of 13 million yuan, reflecting a growth of 22.93% [1]. - The company is a leading player in the education and training sector in Shanghai, focusing on non-academic training and actively developing vocational, adult, and international education, leading to steady revenue growth [1][2]. - The company has a relatively high asset-liability ratio, which increased from 73.86% in 2020 to 92.39% in 2024. However, it has a high cash flow with a cash collection ratio of 123.90% in 2023 and 108.34% in 2024 [3]. Summary by Sections Financial Performance - In 2024, the company reported a gross margin of 44.73%, an increase of 3 percentage points year-on-year. The net profit margin for Q1 2025 was 4.57% [1]. - The forecast for revenue from 2025 to 2027 is 1.60 billion yuan, 2.08 billion yuan, and 2.33 billion yuan, respectively, with corresponding EPS of 0.13 yuan, 0.34 yuan, and 0.45 yuan [5][9]. Strategic Initiatives - The company is rapidly restoring its offline outlets and has implemented a "Famous Teacher" strategy to enhance growth by recruiting top talent from prestigious universities [2]. - The company has repurchased approximately 21.92 million shares, accounting for about 7.65% of its total shares, and launched an employee stock ownership plan to boost employee motivation [4]. Asset and Liability Management - As of the end of 2024, the company's monetary funds and right-of-use assets were 605 million yuan and 491 million yuan, respectively, accounting for 64.70% of total assets [3]. - The company’s contract liabilities grew significantly, from 579 million yuan in 2023 to 622 million yuan in 2024, indicating strong demand for its services [4].

Revenue and Profit - The company achieved significant revenue growth in Q1 2025, with total revenue reaching 199 million yuan, a year-on-year increase of 58.9% [2] - The net profit attributable to shareholders was 40.53 million yuan, reflecting a year-on-year growth of 25.61% [2] - The non-recurring net profit reached 35.96 million yuan, showing a substantial year-on-year increase of 83.7%, indicating strong performance in core business operations [2] Profitability - Despite notable revenue and profit growth, the company's profitability indicators showed divergence, with a gross margin of 36.75%, an increase of 1.63 percentage points year-on-year [3] - However, the net profit margin was 20.95%, which represents a year-on-year decline of 18.6%, suggesting potential pressure on cost control [3] Expense Control - The company demonstrated excellent expense control, with total selling, administrative, and financial expenses amounting to 16.69 million yuan, accounting for 8.38% of revenue, a year-on-year decrease of 18.19% [4] Cash Flow and Balance Sheet - The company's cash and cash equivalents stood at 553 million yuan, a decrease of 26.81% compared to the same period last year [5] - Operating cash flow per share was 0.64 yuan, down 32.02% year-on-year [5] - Accounts receivable increased significantly to 437 million yuan, a year-on-year rise of 60.42%, which warrants attention [5] - Interest-bearing debt amounted to 138 million yuan [5] Business Model and Capital Structure - The company's performance is primarily driven by R&D and equity financing, with a total financing amount of 1.094 billion yuan since its listing and total dividends of 53.34 million yuan, resulting in a dividend financing ratio of 0.05 [6] - While the company has healthy cash assets, attention is needed on cash flow status, as the average operating cash flow over the past three years relative to current liabilities is -6.82% [6] - Financial expenses relative to the average operating cash flow over the past three years have reached 58.46% [6] - The ratio of accounts receivable to profit is notably high at 1273.82%, and the inventory to revenue ratio stands at 111.62%, indicating a need for improved management of accounts receivable and inventory [6]

Core Viewpoint - The article discusses the investment journey of the cosmetic company Proya, highlighting its significant profit growth and market valuation changes over the years, emphasizing the importance of understanding industry dynamics and making informed investment decisions. Group 1: Proya's Financial Performance - In 2017, Proya's profit was 200 million with a market capitalization of 5 billion, resulting in a dynamic P/E ratio of 25 times. By 2018, profits were projected to grow by 40-50%, leading to a lower P/E ratio of 17 times, indicating the stock was undervalued [2]. - By 2021, Proya's profit reached approximately 600 million, with a market capitalization of 40 billion, resulting in a dynamic P/E ratio of nearly 70 times. If profits continued to grow to 2 billion, the P/E ratio would drop to 20 times [4]. - Proya's profits increased from 200 million in 2017 to 1.5 billion in 2024, reflecting a consistent growth trend [11]. Group 2: Market Valuation and Investment Strategy - The article illustrates that selling Proya shares at a high P/E ratio (70 times) in 2021 could have led to missed opportunities, as the stock continued to perform well, while other sectors like real estate and banking saw significant declines [5]. - The author suggests that maintaining a position in high-growth companies like Proya, even at elevated P/E ratios, can be beneficial if the underlying business continues to grow [6]. - The article advises caution when the stock price reaches a certain threshold (30-40), as it may indicate a need to consider reallocating to higher dividend yield stocks [7]. Group 3: Industry Comparisons - Proya's performance is compared to other sectors, such as coal and liquor, where investments in companies with lower P/E ratios (like 7 times for coal) yielded substantial returns [5]. - Historical performance of other companies like Yunnan Baiyao and Heng Rui Pharmaceutical is referenced, showing that maintaining positions in leading companies can lead to significant long-term gains [9][10]. - The article emphasizes the importance of understanding industry trends and the potential for high-growth companies to maintain elevated valuations over time [8].