Core Viewpoint - The company reported a decline in revenue for the first half of 2025, with a year-on-year decrease of 12%, while net profit increased by 17% [1] Financial Performance - 25H1 revenue was 4.593 billion yuan, with a net profit of 678 million yuan and a non-recurring net profit of 559 million yuan [1] - 25Q2 revenue was 1.844 billion yuan, with a net profit of 292 million yuan and a non-recurring net profit of 225 million yuan [1] - The company's gross margin for 25H1 was 22.6%, down 2.28 percentage points year-on-year, and for 25Q2 it was 18.6%, down 2.91 percentage points year-on-year [2] Business Segmentation - In 25H1, education service revenue was 4.1 billion yuan, down 14% year-on-year, with textbook revenue down 7.9% and general books and audiovisual products down 18% [2] - Modern logistics revenue was 1.7 billion yuan, down 3% year-on-year, while educational equipment and sports supplies revenue was 500 million yuan, down 47% year-on-year [2] Cost Management - The company has been actively managing costs, with sales, management, and R&D expense ratios for 25H1 at 6.58%, 5.37%, and 0.23%, respectively [2] - For 25Q2, these ratios were 5.96%, 6.24%, and 0.39%, indicating a continued focus on cost control [2] Future Outlook - The company maintains a positive outlook on its core business due to its licensing advantages and stable attributes [3] - New business initiatives include digital transformation of bookstores, smart education platforms, and game development, which are expected to enhance long-term revenue potential [3] Investment Recommendation - The company is expected to see net profits of 780 million, 810 million, and 830 million yuan for 2025, 2026, and 2027, respectively, with growth rates of 10%, 4%, and 2% [3] - The target market capitalization is set at 14 billion yuan, with a target price of 7.2 yuan, maintaining a "recommended" rating [3]

Core Viewpoint - The report highlights that despite a decline in revenue for the first half of 2025, the company achieved a year-on-year increase in net profit due to reduced tax expenses and increased fair value gains from investments [1][2]. Financial Performance - In H1 2025, the company reported revenue of 4.593 billion, a year-on-year decrease of 11.90%. However, net profit attributable to shareholders was 678 million, reflecting a year-on-year increase of 17.19%. The net profit after deducting non-recurring items was 559 million, down 8.33% year-on-year [1]. - For Q2 2025, revenue was 1.844 billion, a decline of 19.28% year-on-year, while net profit was 292 million, an increase of 2.38% year-on-year. The net profit after deducting non-recurring items was 225 million, down 23.57% year-on-year [1]. Tax Impact and Fair Value Gains - The increase in net profit was primarily due to a significant reduction in income tax expenses, which fell to 9.95 million from 178 million in the same period last year. This was a result of a policy extension allowing certain cultural enterprises to be exempt from corporate income tax until December 31, 2027 [2]. - Additionally, fair value gains increased to 83 million from a loss of 32 million in the previous year, driven by higher returns from investment products and changes in the value of non-current financial assets [2]. Development in Smart Education - The company is actively integrating AI technology into educational scenarios, developing various digital education products. Notable initiatives include the Wanmei Education Platform, which processed online payments of 519 million and sales of 91.74 million in H1 2025, with a total user base of 7.4 million [3]. - Other projects include the Wanxin Research Study mini-program, which launched 63 routes, and the Wanxin Digital Picture Book Library, which offers tailored digital learning experiences for children using AI and big data [3]. Profit Forecast and Valuation - The company is expected to maintain stable operations, with the impact of tax expenses on performance eliminated. Future revenue projections for 2025-2027 are 9.61 billion, 9.98 billion, and 10.38 billion, respectively, with corresponding growth rates of -10.6%, 3.80%, and 4.05%. Net profit forecasts for the same period are 798 million, 835 million, and 892 million, with growth rates of 13.3%, 4.52%, and 6.90% [4].