Summary of Southern Media Conference Call Company Overview - **Company**: Southern Media - **Industry**: Education Publishing and Digital Education Solutions Key Points Industry and Market Developments - **Digital Education Expansion**: The company has increased the coverage of its digital education platform, Yuejiao Xiangyun, to 3 million high-grade primary school students in Guangdong, with AI lesson preparation features implemented in 6,350 schools across the province [2][4] - **New Product Launches**: Plans to collaborate with Tencent to launch new educational products by 2026, including the Southern Smart Teaching Assistant platform, which is expected to generate digital revenue [2][5] - **Government Initiatives**: The company is responding to national policies exploring free preschool education by launching kindergarten reading materials and an AI education platform, aiming to secure government orders [2][9] Financial Performance - **Textbook Distribution**: The total textbook issuance for the fall of 2025 reached 406 million copies, a year-on-year increase of 1.75%, with market-oriented teaching aids also showing growth [2][10] - **Cost Control Measures**: The company is implementing strict cost control measures, including centralized paper procurement and management salary reductions, to enhance profitability despite limited revenue growth [3][21] Strategic Initiatives - **Geographic Expansion**: The company has successfully won a 4.5 million yuan digital textbook project in Guangxi and is expanding its digital products beyond Guangdong, with plans for further outreach [2][7] - **Hong Kong Market Entry**: The company’s history textbook has been approved for sale in Hong Kong, with expectations for significant revenue growth due to the larger market size compared to Macau [2][8] Future Outlook - **Positive Market Trends**: The decentralization of textbook selection rights in Guangdong is expected to stimulate the market for teaching aids, benefiting the company [3][11] - **Spring 2026 Expectations**: The company remains optimistic about the spring 2026 textbook orders, despite the later timing of the Chinese New Year, ensuring timely delivery for revenue recognition [12] Investment and M&A Plans - **Future Acquisitions**: The company is considering mergers and acquisitions focused on resource integration within the province, particularly targeting local publishers and bookstores [23][24] Challenges and Opportunities - **General Book Market**: The general book market is facing challenges, prompting the company to focus on market-oriented teaching aids and low-age children's literature as key growth areas [25] - **Cultural Center Development**: The Guangzhou International Cultural Center project is progressing, with cautious management to ensure it aligns with market conditions [29] Dividend and Financial Management - **Dividend Policy**: The company aims to maintain stable dividend payouts, with discussions on increasing the amount in 2026 [27] - **Efficient Fund Utilization**: In a low-interest environment, the company is exploring stable financial products to enhance fund efficiency [28] Additional Insights - **AI in Education**: The company is committed to becoming a leader in AI+Education, with ongoing product development and standard-setting initiatives in the publishing industry [4][6] - **Market Dynamics**: The competitive landscape in Guangdong requires strategic adaptations, particularly in distribution and publishing rights [14][18]