中信证券教育业24年策略:积极关注行业变化 头部公司拾级而上

CITIC Securities's 24-year strategy for the education industry: Actively pay attention to industry changes, leading companies move up the ranks

Zhitong Finance ·  11/27/2023 09:27

CITIC Securities believes that along with the positive changes in the education industry, some leading companies are expected to show strong growth potential.

The Zhitong Finance app learned that since this year, CITIC Securities has released a research report saying that since this year, some education segment tracks have shown a marked trend of reversal in prosperity, such as education and training, examinations, etc. At the same time, the education technology circuit, along with the explosion of AIGC technology, has also shown great development prospects, and all kinds of players are in full bloom. The bank believes that along with the positive changes in the education industry, some leading companies are expected to show strong growth potential. It is recommended to focus on: 1) leading education and training companies that are actively transforming and re-entering growth; 2) vocational training companies with high demand and industry expectations of a rebound; 3) higher education companies with historically low valuations, high performance certainty, and which are expected to gradually welcome valuation recovery.

The views of CITIC Securities are as follows:

In the post-double reduction era, the education and training industry has regained its vitality, and leading companies have successfully transformed.

The “double reduction” policy and the impact of the epidemic have led to a sharp increase in the supply of offline education and training institutions over the past three years. However, since this year, the recovery of the offline scene has led to a recovery in demand for offline training, and stock education and training companies have begun to regain their vitality under compliant management. Quality education, as an effective complement to parents' rich needs for out-of-school education, is a key transformation direction for education and training companies. Since this year, along with the restoration of the offline scene, the increase in parents' awareness, and the increase in the level of product improvement, the overall prosperity of the quality education market has improved. Leading companies have shown strong competitiveness in the field of quality through the accumulation of original brands, channels, content, and talents.

Demand for public examinations is strong, and there is a clear upward trend in the public examination training boom.

Looking at the demand side, the increase in the number of recent college graduates in recent years has increased pressure on the job market (the Ministry of Education expects the number of graduates to reach 11.58 million in 2023), catalyzing an increase in demand for academic examinations. The number of applicants for the 2024 national examination reached 2.91 million/+410,000, a record high. On the supply side, the industry pattern has been optimized amid the disruptions of the epidemic and fierce competition among contract classes. Stock players have begun to pay more attention to healthy management and growth, focusing on products, operations, teaching and research, technology, etc. The bank believes that with the support of growing demand and the elimination of negative factors in the industry, the upward trend in the public examination training industry is clear, and leading players with leading product power are expected to benefit.

Educational technology is on the rise, and AI+ education has broad prospects.

Since this year, the development of AIGC and multi-modality related technologies has enriched and enhanced the use scenarios, experiences, and effects of educational technology. Overseas online education companies have also launched new education products based on the development of AI technology, focusing on fields such as intelligent question-answering, study plan design, and oral sparring. Domestic education AI is also developing rapidly, but there are still differences from overseas. Leading domestic players mostly use self-developed models+applications to enter. Judging from commercialization, learning machines are one of the important carriers of AI in domestic education.

The bank believes that the combination of education and AI will be one of the important directions for the future development of the industry, and that domestic players with advantages in technology, content, and data are expected to take the lead. Among them, leading education and training companies have significant advantages in teaching content, student data, and understanding of teaching scenarios.

Investment Strategy:

Combining the current demand boom, supply pattern, and the certainty and growth of performance in various education segments, the bank recommends focusing on three main lines:

1) A leading education and training company that is actively transforming and re-entering growth in performance;

2) Vocational training companies with high demand and a rebound in the industry;

3) Higher education companies with historically low valuations, high performance certainty, and are expected to gradually usher in valuation repairs.

Risk factors: the risk of policy changes in the education industry; the risk that the penetration rate of demand for quality education & education hardware will not rise as expected; the risk that competition in the industry will intensify; the risk that the iteration of new technology will impact existing supply; the risk that demand for study abroad will not grow as expected, etc.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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