Science and technology+education have great prospects in the future
Nowadays, artificial intelligence, robots, big data and other fields have become the focus of national strategy and industrial competition, and also an important force to promote scientific and technological innovation and economic transformation; The Chinese robot market is showing a growing momentum.
As the carrier of productivity, educational enterprises are the main body of the market and also bear the responsibility of talent cultivation.
For a long time, Shengtong Education Group has been empowering science and technology education with cutting-edge science and technology, focusing on robot+programming, and benefiting the vast number of students with intelligent education and teaching resources, which will also open a new growth pole of the market.
Lebo turned from loss to profit in 23Q3, and is expected to continue to improve in 2024
Since 2023, the industry environment has improved. The company has promoted store compliance upgrading, adjustment and optimization, and repaired the operation in the past three years, with good results; The third quarter of last year has turned losses into profits, and it is expected that there will be more significant improvement in 2024. Lebo is expected to return to the previous level, and there is room for sustained and healthy growth in the future, specifically:
(1) Number of stores: stores will be optimized from 2022 and further adjusted in 2023 to strengthen store concentration, improve quality and ensure profitability (as of February 2024, Lebo has 137 direct stores and about 550 franchise stores); (2) Rent: After communication and negotiation with the landlord, the rent was optimized; (3) Personnel: The efficiency improvement reform will be carried out in 2023, and the number of employees will be reduced by 200-300 in 24 years compared with the same period in 23 years, but the business volume has not decreased, and the effect is obvious; (4) Number of students: At present, there are 240-250 students in Lebo single store, with an activity of 80% - 90%. In the future, it will focus on driving the growth of the number of students; (5) Passenger unit price: it keeps increasing every year, with an average increase of 10% - 20% nationwide.
When the average number of children in a single store reaches 200-220, the company can achieve a break even, and the number of students in the company remains above the break even line; Even if there are no more stores, each store still has a capacity of 150-200 students, and there is enough room for future growth. As the market environment changes, store saturation and profitability improve, the company will also choose appropriate cities to further promote the reasonable expansion of direct stores and maintain the reasonable growth of scale and profitability.
Explore AI study room and look for new business increment
Lebo uses cutting-edge artificial intelligence technology and education big data to train an AI education hardware product, which Lebo will provide to users after purchase. According to the actual situation of users, plans will be made to help children improve their self-learning ability. The current enrollment comes from the transformation of Lebo AI students and market enrollment.
Maintain profit forecast and "buy" rating
The company has been deeply rooted in the education industry for a long time. In 2016, it acquired the programming brand Lebo Lebo. Later, it successively invested and acquired Zhongming Robot, VIPCODE, Chuangxiang Childhood, etc., and established Shengtong Education Research Institute. Science and technology education has gradually become the second growth curve of the company.
In response to the national policy, the company has actively deployed in science and technology education, and constantly upgraded and updated the curriculum. At present, it has reached cooperation with China Children's Center and other institutions, and exported the curriculum to public off campus education institutions such as Children's Palace, which will have further growth in the future. After years of development, the company has become a leading enterprise in science and technology education, forming a complete science and technology education ecology from hardware production to curriculum design to service provision, and will further expand the science and technology education ecology in the future.
We expect the net profit attributable to the parent company to be RMB 131/221/251 million, EPS to be RMB 0.06/0.19/0.23 per share, and corresponding PE to be 126/38/32X.
Risk warning: price fluctuation risk of raw materials; Risk of failing to meet business expectations; Business cycle change risk; Risk of market demand change, etc.
