Core Viewpoint - The report highlights the financial performance and operational status of Xi'an Botong Information Co., Ltd. for the first half of 2025, indicating significant growth in revenue and net profit, primarily driven by the higher education sector. Group 1: Company Overview - Xi'an Botong Information Co., Ltd. focuses on higher education and computer information technology, with a 70% stake in Xi'an Jiaotong University City College [3][4]. - The company operates under the influence of the Xi'an Economic Development Group, which is its largest shareholder [3]. Group 2: Financial Performance - Total revenue for the first half of 2025 reached approximately CNY 148.70 million, a 5.23% increase from CNY 141.31 million in the same period of 2024 [7]. - The total profit amounted to CNY 18.12 million, reflecting a 42.15% increase compared to CNY 12.75 million in the previous year [7]. - Net profit attributable to shareholders was CNY 13.33 million, up 42.95% from CNY 9.33 million year-on-year [7]. - The net cash flow from operating activities was negative at CNY -119.46 million, worsening by 8.70% from CNY -109.90 million in the previous year [7]. Group 3: Business Operations - The higher education segment saw a revenue increase due to rising tuition fees and an increase in student enrollment, with main business income reaching CNY 147.34 million, a 5.70% increase from the previous year [8]. - The company has initiated the second phase of campus construction for the City College to meet the requirements for its transition to an independent private university [8][10]. Group 4: Industry Context - The company operates in a dynamic regulatory environment for private education, with recent amendments allowing private institutions to choose between non-profit and for-profit status [6][10]. - The education sector is experiencing increased competition and regulatory scrutiny, impacting enrollment and operational strategies [10]. Group 5: Future Outlook - The company is closely monitoring policy developments regarding the classification of private educational institutions and is preparing to adapt its operational strategies accordingly [10]. - The transition of the City College to an independent institution is currently under review by the Shaanxi Provincial Education Department, which is crucial for the company's future growth [10].

Investment Rating - The report maintains a "Buy" rating for the company [7][5]. Core Views - The company's fundamentals remain robust, with a focus on expanding its educational network through new partnerships and capital expenditures [1][4]. - The company reported a revenue of 1.413 billion RMB for FY25H1, a year-on-year increase of 7.8%, and an adjusted net profit of 456 million RMB, up 7.0% year-on-year, slightly exceeding expectations [1]. - The company is actively enhancing its enrollment competitiveness and optimizing its student demographics, with significant improvements in school rankings and an increase in the proportion of undergraduate students [2]. Summary by Sections Financial Performance - For FY25H1, the company achieved a revenue of 1.413 billion RMB, accounting for 54% of the annual forecast, and an adjusted net profit of 456 million RMB, representing 57% of the annual forecast [1]. - The company’s capital expenditure for the first half of FY25 was approximately 393 million RMB, aligning with the annual guidance of 800-900 million RMB [1][3]. Enrollment and Competitive Position - The company has seen significant improvements in its school rankings, with notable advancements in various provinces, enhancing its enrollment appeal [2]. - The average tuition fee for enrolled students increased by 9.5%, contributing to an 8.1% year-on-year growth in tuition revenue for FY25H1 [2]. Expansion Plans - The company has signed a cooperation agreement to establish a higher education institution in Hainan, aiming to leverage diverse educational and research experiences to cultivate internationally-minded talent [4]. - The ongoing construction of new campuses and the application for master's degree programs are progressing well, with expectations to start enrollment in September 2025 [3]. Profit Forecast and Valuation - The report slightly raises the profit forecast for FY25-27, projecting net profits of 803 million RMB, 857 million RMB, and 917 million RMB respectively [5]. - The target price based on the Dividend Discount Model (DDM) is set at 2.71 HKD, reflecting adjustments for exchange rates and share count changes [5].