Investment Rating - The report assigns a "Buy" rating to Tianli International Holdings (01773) with a target price based on the last closing price of HKD 4.42 [1]. Core Viewpoints - Tianli International Holdings is a leading K12 private education group in China, with a focus on high school education and diversified pathways for student advancement, supported by a stable shareholding structure and experienced management team [3][19][20]. - The company has successfully expanded its operations across 18 provinces, serving over 130,000 students, with a significant emphasis on high school education [3][18]. - The private education sector is experiencing a shift due to policy changes, with a growing demand for private high schools, which are expected to reach a market size of RMB 150 billion to 218.5 billion by 2025 [4][47]. Summary by Sections Company Overview - Tianli International Holdings has developed a comprehensive K12 education system since its establishment in 2002, evolving from a focus on K9 education to becoming a leader in the western region of China [3][13][14]. - The company has a stable shareholding structure, with the controlling shareholder holding 42.46% of the shares, ensuring effective governance and strategic execution [19][20]. Industry Status and Trends - The private education industry is undergoing regulatory changes that have led to a contraction in K9 businesses while allowing for the expansion of private high schools, which have increased from 2,585 in 2015 to 4,567 in 2023 [4][46]. - The demand for high school education continues to grow, with a current enrollment rate of 60% and a significant gap in available seats, indicating strong future growth potential [42][47]. Business Development Strategy - The company has adopted a "One Core, Multiple Supports" strategy, focusing on strengthening its high school operations while diversifying into various educational services, including online platforms and international education [4][52][56]. - The light-asset model has been implemented to reduce investment risks and costs, allowing for rapid expansion through leasing and management contracts [58][61]. Financial Analysis - The financial performance shows significant growth, with a projected revenue increase from RMB 3.32 billion in FY2024 to RMB 5.41 billion by FY2027, alongside a net profit growth from RMB 576 million to RMB 1.15 billion in the same period [5][7]. - The company is expected to maintain a stable gross margin of around 33.7% and improve its net profit margin to 16.7% [5][7].

Investment Rating - The report maintains a "Hold" rating for the company [6] Core Insights - The company has shown a turnaround in performance with a revenue increase of 17.7% year-on-year in Q1 2025, reaching 0.91 billion, and a net profit attributable to shareholders of 0.47 million, up 113% [1] - The K12 school operations are expanding, with notable achievements in student admissions to prestigious universities, indicating a strong educational quality and reputation [3][4] - The company is diversifying its course offerings, including the introduction of AP courses and domestic examination-focused classes, enhancing its educational services [4][5] Financial Performance - The company expects revenue of 3.2 billion in 2024, representing a 26% increase, but anticipates a net loss of 0.37 billion [1] - The projected net profits for 2025-2027 are 0.23 billion, 0.39 billion, and 0.78 billion respectively, with corresponding EPS of 0.04, 0.07, and 0.13 [11] - The company’s total market capitalization is approximately 2.82 billion, with a current price of 4.72 yuan per share [7] Operational Developments - The company has successfully established two K12 schools, which have received high recognition for their educational standards and facilities [2] - The operational experience gained since 2015 has significantly improved the company's educational service capabilities [2] - The company has signed a cooperation agreement with a bilingual school to provide operational management consulting, indicating a strategic move towards asset-light business models [5]