Huaxi Securities has reiterated its "Buy" rating on FENBI (02469), highlighting that the strategic cooperation between FENBI and Huatu Shanding could significantly enhance the competitive landscape of the recruitment training industry. The collaboration will integrate both parties' strengths in key areas such as technology (e.g., AI course development), distribution channels (online and offline), and corporate governance, jointly promoting the industry's healthy development. This move not only injects new momentum into FENBI's second growth curve through AI products amid expanding market demand but also creates a favorable environment for stabilizing prices in traditional training businesses.
Key points from Huaxi Securities' analysis include:
**Strategic Cooperation Agreement Details** The partnership will focus on: 1) **Investment Collaboration**: Exploring opportunities in equity investments, including strategic investments and joint ventures. 2) **Corporate Governance**: Recommending directors to each other’s entities, establishing regular communication mechanisms, and sharing advanced management expertise. 3) **AI Technology Cooperation**: Jointly developing AI solutions for recruitment exam training, integrating AI into courses, and facilitating exchanges between core R&D teams. 4) **Distribution Channel Integration**: Leveraging online and offline channels to enhance operational efficiency. 5) **Reducing Unhealthy Competition**: Advocating industry self-regulation and improving service standards to set benchmarks.
**Recent Corporate Actions** - On November 3, FENBI announced a share buyback plan of up to HK$200 million. - On December 4, the company disclosed the purchase of 8.5 million shares under its 2023 equity incentive plan, totaling approximately HK$25.5 million.
**Benefits of the Partnership** 1) Boosts market confidence. 2) The recruitment training industry, after over three years of price wars, may see stabilization. As top players, FENBI and Huatu’s collaboration could optimize online-offline synergies and improve industry dynamics.
**Growth Prospects** 1) The 2025 national civil service exams saw 3.416 million qualified applicants, a 12.6% YoY increase, reflecting growing demand. FENBI’s AI-based written exam product, launched in April, could drive a second growth curve. 2) Traditional large and small-class training businesses may benefit from stabilized pricing. 3) AI products may expand to interview training, state-owned enterprise exams, and public institution tests next year.
**Risk Factors** Potential policy changes, intense competition in large-class training, customer acquisition challenges for small-class programs, and systemic risks.
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