GLMS SEC: "Three-Dimensional Resonance" in Education Sector Drives Earnings; "AI+Education" Opens Growth Potential

Stock News12-22 14:10

GLMS SEC released a research report stating that the education sector is experiencing a "three-dimensional resonance" of policy marginal improvements, industry supply clearing, and demand release. The investment logic has shifted from policy-driven to earnings-driven, with relatively low valuations. Under policy support, the sector may achieve a "Davis Double Click" in earnings and valuations. Meanwhile, education is a key application scenario for AI, making "AI+Education" a primary investment theme, with leading education companies poised to benefit from this trend. The firm maintains a "recommended" rating for the sector.

Key insights from GLMS SEC include: 1. **"AI+Education" Emerges as a Trend**: Education is foundational for national strength and rejuvenation. The central government has introduced policies to promote AI integration in education, particularly in K-12 tech education, accelerating the sector's modernization. Leading education firms are actively investing in AI-powered hardware and large-scale educational models to capture market share.

2. **"Golden Decade" for Secondary and College Entrance Exams**: The post-"two-child" policy baby boom (2011-2017) will drive sustained growth in exam-related markets over the next decade. Additionally, quality-oriented education (arts, STEM, camps, etc.) is thriving post-"double reduction," with the market expected to exceed RMB 1 trillion by 2027. Public sector exams are also gaining popularity due to rising graduate numbers and employment preferences.

3. **Policy Support and Fertility Incentives Boost Demand**: Recent regulations emphasize "regulated and healthy development" while clarifying approval processes for after-school tutoring. Pro-fertility policies, including subsidies and free preschool education initiatives, further stimulate demand. Elite training programs (e.g., "Qiu Class," "DanDan Camp") and national talent plans are expected to drive additional growth.

4. **Strong Earnings Outlook for Education Firms**: Key metrics—new enrollments, renewal rates, pricing, and attendance—determine profitability. Leading companies like XueDa Education and Aoli Education show rapid contract liability growth, while Kaiwen Education anticipates a turnaround. Public exam leader Huatu Shanding, resurgent management training firm Action Education, and higher education player Botong are also poised for accelerated earnings.

**Risks**: Policy changes, intensified competition, enrollment shortfalls, and slower-than-expected earnings growth.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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