Core Viewpoint - The former actual controller of Huatu Shanding, Che Lu, plans to reduce his stake in the company by up to 3%, potentially cashing out approximately 386 million yuan, indicating a trend of significant share reductions by the former controller amid concerns about the company's performance [2][5][10]. Group 1: Shareholding and Reduction Plans - Che Lu currently holds 16.53% of Huatu Shanding's shares, making him the second-largest shareholder [4][6]. - This planned reduction marks Che Lu's fourth attempt to cash out, with the latest reduction scheduled between June 19 and September 18, 2025 [4][6]. - The shares Che Lu intends to sell are sourced from shares acquired before the company's IPO and from capital reserve conversions [4]. Group 2: Financial Performance and Market Context - Huatu Shanding's core business includes non-degree training and architectural design, with non-degree training being the primary focus [3][10]. - The company has faced poor performance since its change of ownership in 2019, with a notable decline in revenue and profits until a recent recovery in 2024, where revenue increased by 1046.34% year-on-year [10][11]. - In the first quarter of 2024, the company reported a revenue of 828 million yuan and a net profit of 121 million yuan, marking significant growth compared to previous years [11]. Group 3: Historical Context and Ownership Changes - Huatu Shanding was formerly known as Shanding Design and underwent a change in control in 2019, leading to a significant ownership transfer and a rebranding to Huatu Shanding [6][7]. - The ownership transition involved a complex arrangement where Huatu Education's assets were effectively injected into Huatu Shanding, aiming to pivot the company's focus towards education [10][11]. - Che Lu has previously cashed out significant amounts, totaling nearly 800 million yuan through various share reductions since the company's ownership change [9].

Investment Rating - The industry investment rating is "Outperform the Market" (maintained rating) [5] Core Views - The report highlights that Huatu Shanding has become a new leader in offline public examination training with impressive performance, targeting a non-net profit of 320 million for 2025 [1] - For 2024, the non-degree training revenue is projected to reach 2.8 billion, with a year-on-year growth of 1046%, and a net profit of 52.99 million, marking a turnaround from losses [1] - The report emphasizes the company's focus on high-quality products and a strong market presence, with over 330,000 training students and coverage in more than 300 cities and 600 counties [4] Summary by Sections Financial Performance - In Q1 2025, revenue reached 830 million, a year-on-year increase of 19%, with a net profit of 121 million, up 67% year-on-year [2] - The gross margin improved to 61%, a 6 percentage point increase year-on-year, while the net profit margin reached 15%, up 4 percentage points year-on-year [2] - As of Q1 2025, contract liabilities amounted to 834 million, reflecting a 53% year-on-year increase, indicating positive revenue growth expectations [2] Dividends and Buybacks - The company plans to distribute a cash dividend of 0.55 yuan per 10 shares (including tax) and to increase capital by issuing 1.8 bonus shares for every 10 shares held, with a total dividend payout ratio of 68% [3] - A share buyback plan is proposed, with a budget of 225 million to 450 million yuan, at a maximum price of 127.91 yuan per share, aiming to repurchase 1.76 million to 3.52 million shares, representing 1.25% to 2.5% of the total share capital [3] Stock Incentives - The company intends to grant stock options not exceeding 2.72 million shares, representing 1.94% of the total share capital, with a purchase price of 45.91 yuan per share [4] - Performance targets for 2025 and 2026 are set at 320 million and 400 million for non-net profit, respectively, with significant year-on-year growth expectations [4] - If performance meets or exceeds the target, 100% of the options will be unlocked; if below the trigger value, none will be unlocked [4]