According to the Zhitong Finance APP, Minsheng Securities released a research report stating that due to the relaxation of the &#34;two-child&#34; policy and the arrival of &#34;Longbao,&#34; China experienced a small peak in births from 2011 to 2017. The scale of newborns determines the number of new births, and it is expected that China will enter a &#34;golden decade&#34; for the high school entrance examination and the college entrance examination, with the market expected to continue growing. At the same time, quality education has rapidly developed after the &#34;double reduction&#34; policy, with various fields such as arts, sports, STEAM, camps, and research studies flourishing, and the market is expected to exceed one trillion yuan by 2027. Currently, the education industry is experiencing a &#34;three-dimensional resonance&#34; of marginal policy improvement, industry supply clearing, and demand release, with valuation advantages becoming increasingly significant. Additionally, the education sector is an important application scenario for AI, and the rise of AI+education is expected to enhance the industry's valuation space.
<h2>The main viewpoints of Minsheng Securities are as follows:</h2>
&#34;Double reduction&#34; accelerates industry supply clearing, and the securitization of education companies is hindered
The &#34;double reduction&#34; policy has led to a supply-side clearing driven by industry policy, with industry leaders adopting contraction strategies, while most small and medium-sized institutions have shut down or transformed. By February 2022, the reduction rate of offline institutions was 92.14%, and the reduction rate of online institutions was 87.07%. The &#34;Implementation Regulations&#34; impose strict restrictions on group-based schooling and related transactions, prohibiting the control of compulsory education schools through mergers and acquisitions, franchise chains, or agreement control, and prohibiting profit transfer through related transactions. This means that education investments oriented towards capital and exiting through asset securitization will be significantly affected, leading to a decline in capital investment enthusiasm in the education sector. The state encourages vocational education, and the integration of industry and education may become a trend, with policies supporting the integration of vocational and general education, innovatively establishing a vocational education college entrance examination system, enhancing students' choices with both vocational and examination characteristics.
Opportunities for high school entrance examination + quality education, AI + education stands at the forefront
Due to the relaxation of the &#34;two-child&#34; policy and the arrival of &#34;Longbao,&#34; China experienced a small peak in births from 2011 to 2017. The scale of newborns determines the number of new births, and it is expected that China will enter a &#34;golden decade&#34; for the high school entrance examination and the college entrance examination, with the market expected to continue growing. At the same time, quality education has rapidly developed after the &#34;double reduction,&#34; with various fields such as arts, sports, STEAM, camps, and research studies flourishing, and the market is expected to exceed one trillion yuan by 2027. The education industry has entered a stage of stock competition + survival of the fittest, with industry leaders, regional leaders, famous teacher studios, and institutions with pathways to higher education being the main participants in the current industry. Education companies that have survived the &#34;double reduction&#34; are competitive and can enjoy the benefits of the times. National policies support AI + education, and industry leaders and regional leaders are expected to benefit from the market opportunities of AI + education.
Marginal improvement in industry policies, continuous release of education demand
Since 2024, there has been a marginal improvement in education industry policies. The main tone of the &#34;Regulations&#34; is &#34;how to develop,&#34; &#34;regulate development,&#34; and &#34;healthy development,&#34; rather than &#34;prohibit,&#34; &#34;forbid,&#34; and &#34;ban&#34;; the biggest highlight of the &#34;Measures&#34; is that high school subject training will no longer be executed according to the &#34;double reduction&#34; policy, and it allows high school training institutions to choose for-profit status, meeting the reasonable educational needs of parents and students. Education demand is a rigid demand, rapidly released under the influence of elite talent cultivation, strong foundation plans, and other initiatives such as &#34;early training,&#34; &#34;Qiu class,&#34; &#34;three public,&#34; and &#34;Dan Dan camp.&#34; The education industry exhibits characteristics of survival of the fittest, with listed education companies becoming the main beneficiaries of this round of education market recovery, utilizing rights assets, leasing liabilities, and contract liabilities
Operating net cash flow, operating income, net profit, and other financial indicators have significantly improved, and performance is accelerating.
Investment Recommendation
The future of &#34;three-dimensional resonance&#34; is promising, with AI+ enhancing valuation space. The education industry is experiencing a &#34;three-dimensional resonance&#34; of marginal policy improvement, industry supply clearing, and demand release, making valuation advantages increasingly significant. At the same time, the education sector is an important application scenario for AI, and the rise of AI+ education is expected to enhance the industry's valuation space.
It is the right time to allocate in the education sector, maintaining an &#34;overweight&#34; rating for the industry, with a focus on recommending Kaiwen Education (002659.SZ) (the &#34;first stock&#34; of international schools, actively laying out AI+ education), HUATU CENDES (300492.SZ) (a &#34;new leader&#34; in offline public examination, with performance expected to accelerate), XUEDA (000526.SZ) (a leader in &#34;personalized&#34; education and training, benefiting from the release of demand for high school and college entrance exams), Action Education (605098.SH) (the &#34;first stock&#34; in effective management, with a &#34;one body, two wings&#34; strategy), and cautiously recommending Kede Education (300192.SZ) (a leading ink company undergoing strategic transformation, with AI+ education worth looking forward to) and SXN (600661.SH) (a leading comprehensive education and training company in Shanghai, with promising strategic transformation prospects).
Risk Warning
Risks include policy changes, intensified industry competition, enrollment falling short of expectations, and slow performance release

002659

600661

300492

605098

000526

Minsheng Securities released a research report indicating that the education industry is experiencing a "three-dimensional resonance" of policy improvement, supply clearance, and demand release, significantly enhancing the industry's valuation advantage. It is expected that the high school entrance examination and college entrance examination markets will continue to grow, and the quality education market is expected to exceed one trillion yuan by 2027. The rise of AI+ education will further enhance the industry's valuation space. Policy support for vocational education and the integration of industry and education have increased students' choices

Zhitong

Kaiwen Education

HUATU CENDES

Action Education

XUEDA

CKH HOLDINGS

Kingswood Education

Minsheng Securities: "Three-Dimensional Resonance" Future is Promising AI + Education Helps Enhance Industry Valuation Space