Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 6.89, indicating a potential upside of 26.9% from the current price of HKD 5.43 [7]. Core Insights - The company, 卓越教育集团 (Excellence Education Group), is a leading player in the K12 education sector in South China, focusing on comprehensive growth services for children. The company has successfully transitioned to quality education, with a significant increase in net profit expected in the coming years [4][6]. - The K12 education market in Guangdong is projected to grow, with a compound annual growth rate (CAGR) of 5% to 7% from 2025 to 2030, driven by strong demand for quality non-subject education [5]. - The company has a strong brand reputation and teaching capabilities, with a high retention rate of nearly 80% for summer courses in Guangzhou. The introduction of AI-driven courses aligns with national trends, further enhancing its market position [6]. Summary by Sections Company Overview - Established in 1997 and listed in 2018, the company has shifted its focus from traditional subject education to quality education, particularly after the "double reduction" policy in 2021. The revenue from quality education is expected to account for 64.74% of total revenue by 2024 [16][21]. Industry Analysis - The "double reduction" policy has led to a significant reduction in the number of K9 subject training institutions, with a decrease of 96% in offline institutions. This has created opportunities for quality education providers [43][44]. - The demand for quality education remains strong, with increasing enrollment rates in high schools and a growing emphasis on comprehensive student development [48]. Financial Projections - The company is expected to achieve revenues of HKD 19.95 billion, HKD 23.81 billion, and HKD 28.11 billion from 2025 to 2027, with corresponding net profits of HKD 3.25 billion, HKD 3.82 billion, and HKD 4.46 billion, reflecting robust growth rates [7][8].