Investment Rating - The report maintains a "Buy" rating for Tianli International Holdings (1773 HK) with a target price of HKD 4.21 [5][10][4]. Core Insights - Tianli International Holdings reported FY25 revenue of RMB 3.589 billion, an increase of 8.1% year-on-year, and a net profit of RMB 663.48 million, up 16.5% year-on-year, aligning with performance forecasts. However, the adjusted net profit of approximately RMB 634 million fell short of the expected RMB 771 million due to increased investments in quality and resources [1][4]. - The company is focusing on a "quality first" strategy, enhancing student quality and investing in quality faculty, logistics, and AI business, which has led to a slight underperformance in short-term financial results. Starting FY26, the company plans to rebalance educational quality and short-term financial performance to drive profit growth [1][3]. Revenue Growth - Revenue from various segments showed steady growth in FY25: Comprehensive education services increased by 7%, product sales by 8%, comprehensive logistics services by 2.7%, and management and franchising by 93.9%. The company achieved a 90% undergraduate rate and a 58% first-tier rate in mature campuses for the 2025 college entrance examination [2][3]. Enrollment and Profitability - The growth rate of enrolled students in the fall semester of FY26 was 8%, a decline from 30% the previous year, primarily due to the company's focus on controlling the quality of new students. The adjusted net profit for FY25 was lower than expected due to increased costs related to logistics, quality faculty, and AI investments [3][4]. Financial Projections - The adjusted net profit estimates for FY26, FY27, and FY28 have been revised down to RMB 699 million, RMB 795 million, and RMB 864 million, respectively, reflecting a 30% reduction from previous estimates. The revenue projections for FY26, FY27, and FY28 are set at RMB 3.900 billion, RMB 4.277 billion, and RMB 4.574 billion, respectively [10][11]. Valuation Metrics - The report indicates a DCF target price adjustment to HKD 4.21 from a previous HKD 5.89, maintaining a WACC of 10.76% and a perpetual growth rate of 1% [4][10]. The current valuation is considered to have a high cost-performance ratio [1]. Shareholder Returns - The total dividend payout for the year was approximately RMB 200 million, maintaining a dividend payout ratio of around 30%, indicating stable shareholder returns [1]. Market Sentiment - The report suggests that recent market fluctuations have largely reflected pessimistic expectations regarding short-term performance, supporting the maintained "Buy" rating despite the adjustments in profit forecasts [4][10].