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On August 6, the education sector moved up abnormally, with the sector rising 7.36%. Stocks such as Code Education, Angli Education, Action Education, and XueDa Education achieved their 10CM daily limit. Stocks such as Offcn Education, Guoxin Culture, Chuanzhi Education, Doshin Education, and China High-Tech followed suit.

On the news front, the State Council recently issued the "Opinions on Promoting the High-Quality Development of Service Consumption" (hereinafter referred to as the "Opinions"), which proposed to promote colleges and universities, scientific research institutions, and social organizations to open up high-quality educational resources to meet the diversified and personalized learning needs of the general public. Promote the improvement of the quality and efficiency of vocational education and build high-level vocational schools and majors.

The "Opinions" emphasize that schools should be guided to introduce third-party institutions with corresponding qualifications to provide high-quality non-academic public after-school services through purchasing services and other means in accordance with relevant regulations.

With the support of policies, the industry is "back to normal"

Public data shows that the development of my country's educational institutions can be traced back to the early days of reform and opening up. With the rapid economic growth and the increasing emphasis on education in society, the education and training industry has gradually emerged. At first, educational institutions were mainly composed of public schools and a small number of training institutions to meet the needs of Hong Kong university students and parents for extracurricular tutoring. Since the 1980s, the education and training market has expanded rapidly and gradually shown characteristics such as diversification, specialization, and branding.

With the rapid development of information technology, especially the popularization of Internet technology, the education industry has ushered in new changes. The rise of online education platforms has broken the time and space limitations of traditional education. Especially during the epidemic, online education has almost become the only way for students to receive education.

However, due to the emphasis on education and the various demands of parents for their children and adults for their own development, the education industry has become increasingly "competitive" and the burden on students has become increasingly heavier.

In order to compete for market share, many institutions have adopted low-level competition methods such as price wars, which has severely squeezed the overall profit level of the industry. At the same time, the service level is uneven, and some institutions have neglected teaching quality and service level in pursuit of short-term interests, which has affected the healthy development of the industry.

As giants in the K12 field, New Oriental and TAL Education have long been competing fiercely during key periods such as the summer vacation.

It is reported that Xueersi once launched courses such as "50 yuan promotional class" and "50 yuan math class" to attract parents and students with low prices. New Oriental Online directly offered a summer vacation live class with two teachers at a price of 20 yuan for the three subjects of Chinese, mathematics and English, further intensifying the price war.

Therefore, the government has continuously increased its management of the education industry and introduced a series of policies and measures to promote the healthy development of the industry.

Among them, the "double reduction" policy has imposed strict restrictions on the K12 subject training market, which once severely suppressed the education and training institutions on the market. However, industry insiders also believe that the "double reduction" policy has provided development opportunities for the quality education market.

At the same time, the government has increased its support for vocational education and continuing education to meet the changes in industrial upgrading and talent needs.

AI technology helps industry development

At present, my country's education and training market has become a huge industry.

According to the data from the "2021 China Education and Training Industry Report", the scale of China's education and training market reached nearly 300 billion yuan in 2020, and is expected to exceed 500 billion yuan by 2025. The market is mainly composed of extracurricular tutoring for primary and secondary schools, vocational skills training, academic education, early childhood education and other fields, among which the market for extracurricular tutoring for primary and secondary schools is the largest, accounting for nearly 50% of the entire market.

Faced with the still huge market, the agency predicts that the government will continue to strengthen supervision and guidance of the education and training industry. On the one hand, the government will introduce more policies to regulate the market order and prevent vicious competition and chaos; on the other hand, the government will increase financial investment and policy support for the education industry to promote the healthy development of the industry.

At present, the education industry is undergoing digital transformation, and the widespread application of online education, intelligent teaching, virtual reality and other technologies has changed the traditional teaching model and education form. New technologies for digital transformation continue to emerge, bringing new development opportunities to the education industry.

With the continuous application of technologies such as big data and artificial intelligence, education and training institutions can provide students with customized learning plans and resources through intelligent analysis of students' learning behaviors and grades, thereby improving learning efficiency and learning interest. Virtual reality (VR), augmented reality (AR), online live broadcast... The application of AI technology will make the learning experience more vivid and interesting, breaking the limitations of time and space.

In addition, as society's demands for individual academic background, general skills, and comprehensive qualities gradually increase, and as workplace competition intensifies, the demand for education and training will continue to grow. In particular, the adult learning market will present greater growth potential.

According to the forecast of China Research Institute of Industry, the scale of China's adult learning market will continue to rise and reach 1.04 trillion yuan by 2027.

Industry development, enterprises benefit

The market is huge, the industry is constantly developing, and special forms of education are emerging. For enterprises, although policy supervision is strong, there is still room for upward growth.

Kede Education, which achieved a 10CM daily limit in this wave of sector rise, is fully engaged in vocational education that is in line with national policies and national policy support. Financial report data shows that in 2023, vocational school and repeat business continued to pick up, with revenue of 771 million yuan, a year-on-year decrease of 2.94%. The decline in revenue was mainly due to the divestiture of K12 education and training business at the end of 2022. Among them, vocational school and repeat business, enrollment has steadily recovered, and revenue of 353 million yuan, a year-on-year increase of 23.74%. Looking at the split subsidiaries, Longmen Education's revenue was 313 million yuan, a year-on-year decrease of 17.92%; Tianjin Overseas Travel's revenue was 41.05 million yuan, a year-on-year increase of 48.14%.

Action Education focuses on the key customer strategy. It defines customers with an annual cumulative order volume of one million as key customers, accurately develops customer portraits, evaluates, proposes, develops learning and service plans based on customer needs, creates business opportunities and continues to follow up. The goal for 2023 is to develop 200 key customers, and by the end of 2023, it has actually reached in-depth cooperation with 240+ key customer companies; the goal for 2024 is to develop 300.

Only Education continues to deepen its business layout in four major sectors - quality education, vocational education, adult education, international and basic education, and focuses on expanding its business scale and achieving high-quality business development. The company has continuously upgraded, iterated, and improved its product system, vigorously strengthened the construction of its teaching and research team, and created a competitive and efficient product system. At the same time, it continues to coordinate and optimize the layout of its campuses, promote the integration of campus products and the upgrading of campus environment creation. In the first half of the year, the company's performance suffered losses due to the related costs and expenses incurred in expanding its business scale.

Industry insiders believe that at present, the government has not relaxed its supervision of the education industry. Some companies are slowly clearing up the impact of the "double reductions". Some companies have also begun to divest the education sector and seek other development paths, but this industry will always exist and will always be needed. It is more suitable for companies with a long-term spirit to achieve long-term development.