<div id="readability-page-1">The company’s new business model after a government crackdown centers on providing education services to schools, with a growing use of AI <h4>Key Takeaways:</h4> <ul> <li>Tianli International’s net profit rose 21% in the first half of its fiscal year through February, while its revenue increased by 14.2%</li> <li>The company’s gross margins are roughly twice as high as they were before a government crackdown in 2021, after it dropped its tutoring business to focus on school operation</li> </ul> By Edith Terry Tianli International Holdings Ltd. (1773.HK) is among a handful of edtech companies that have not only survived but thrived in the market five years after China banned for-profit tutoring services for K-12 students in core curriculum areas. Unfortunately for Tianli, investors who were badly burned in the crackdown don’t seem willing to give the company a second chance. That’s too bad for Tianli, whose turnaround is a story of renewal in a field that still holds out huge potential due to the strong value Chinese culture places on education. In its latest results, announced last week, Tianli reported its revenue grew by 14% year-on-year to 2.1 billion yuan ($314 million) in the six months to February, the first half of its fiscal year, while its profit rose 21% to 471.3 million yuan. The reversal of an 81.8 million yuan impairment loss was responsible for most of the profit gain, after Tianli was able to obtain operating licenses for art training that it previously wrote off after the crackdown. That loss was just a tiny part of the more than 1 billion yuan in impairments that Tianli took in 2021 related to the crackdown. Without the reversal, Tianli’s profit would have been flat year-on-year. The flat profit, despite the double-digit revenue growth, was partly the result of margin pressure, as the company’s gross margin fell 2.4 percentage points to 35.2% in the latest six-month period. But notably, the latest figure was twice as high as the year before the regulatory crackdown, when Tianli’s gross margin was just 17.2%. Tianli is in the same boat with peers like Gaotu Techedu (GOTU.US), TAL Education (TAL.US) and New Oriental (EDU.US, 9901.HK), which have all survived by pivoting to education-related services still permitted post-crackdown. Gaotu turned to prep courses for college entrance and civil service exams, TAL Education to small-class enrichment programs, and New Oriental to adult education and tutoring in non-academic subjects. <h4>Pivot to education services</h4> Tianli pivoted as well. Its founder Luo Shi, a former property developer, previously operated private schools, establishing the first one in 2002. He went on to expand that, and the company had a network of 24 schools and 11 tutoring centers, concentrated in Southwest China’s Sichuan and adjacent provinces by the time of Tianli’s Hong Kong IPO in 2018. After the crackdown, Tianli “de-consolidated” 30 of its schools, essentially removing them from the listed company’s business. It currently gets its revenue by providing a mix of services for its former network of owned and franchised schools, including the supply of educational, management and logistics services, as well as product sales. Comprehensive educational services, the company’s biggest revenue source, rose by a modest 3.4% year-on-year to 1 billion yuan for the latest six-month period. Product sales grew by a stronger 45.5% to 691 million yuan, while logistical services fell 1.7% to 326.7 million yuan. Management and franchise fees increased by 38.7%, though they were only a small part of Tianli’s revenue mix at 78.1 million yuan. The relatively strong results extended a similar performance in Tianli’s previous fiscal year through last August, when its revenue grew by 8.1% to 3.58 billion yuan, and its profit grew by 16.5% to 648 million yuan. In a recent note, Huatai Securities raised its profit forecast for Tianli’s current fiscal year by 15% to 773 million yuan and maintained its “buy” rating. Guoxin Securities maintained a similar “outperform” rating, noting the market continues to discount education stocks because of declining birth rates and low liquidity for education stocks in general. Despite the generally positive signals from Tianli’s latest report, investors weren’t convinced. Since the results announcement last Friday, the stock has fallen by more than 10%, leaving it down about 80% from its pre-crackdown peak. <h4>AI embrace</h4> In what probably seems like a no-brainer for education companies, Tianli and its peers are stepping up their investments in AI – something investors may not be pricing into the stock. Gaotu uses DeepSeek, the Chinese AI frontrunner, for its AI tools and an “All with AI” business strategy. TAL has developed Math GPT, a math specific large language model and an “Inheritance of All Things” educational model developed with Beijing Normal University. New Oriental has a one-on-one bootcamp for personalized tutoring using AI, as well as its “One Look” app based on its personalized tutoring system. Tianli has also embraced AI with its Tianli Qiming AI Learning Companion, launched last June, which it says is the first large AI model in China to be officially registered and widely applied in classrooms. Luo Shi told China Daily the application combines large-scale resources with personalized growth. “Large models enable students to redefine their learning path and make high-quality educational resources more accessible, turning personalized education into a reality,” he said. While only experts can compare these offerings on a granular basis, the director of the China Association for Educational Technology, Zhang Shaogang, noted Tianli’s large language model was developed using the experience of 250,000 students in over 100 schools. By July 2025, the model had already been implemented in 107 schools across China, according to Tianli executive Lou Yongqiang. In March, Tianli signed a strategic agreement with Tencent to develop a “Subject Brain” with “cognitive-level” intelligence. The Tianli brain will create agents for specific subjects, covering research, teaching, learning, practice, testing and evaluation, according to the company. The AI business seems to be growing quickly. At the end of February, Tianli’s 26th AI College Entrance Exam Intensive Bootcamp project had enrolled 2,331 students, an increase of more than 130% over the previous year. Still, Tianli’s decision not to disclose any financials for the AI business, which falls under its comprehensive educational services segment, suggests it is probably not a significant revenue contributor yet. Tianli is also doing a good job in cost control. Its ratio of sales, administrative and financial expenses to revenue improved by 0.5 percentage points to 10.7% in the latest six-month period, “achieving a good balance between growth and efficiency,” according to Huatai Securities. Whether Tianli’s ongoing turnaround will challenge investors to change their perceptions of the company remains to be seen, as many of those are probably still licking their wounds from crackdown-related losses. But at least the company has revived its prospects as a viable business. Its price-to-earnings (P/E) ratio of 6.5 is far below the 24 for both TAL and New Oriental Education, showing Tianli may deserve a fresh look from investors as its post-crackdown recovery marches ahead. To subscribe to Bamboo Works weekly free newsletter, click here</div>

天立國際控股

天利國際控股有限公司在中國禁止 K-12 核心課程的營利性輔導服務五年後，成為少數不僅生存而且繁榮的教育科技公司之一。該公司在政府打擊後轉型，專注於為學校提供教育服務，並逐漸使用人工智能。儘管淨利潤在截至 2 月的財政年度上半年增長 21%，收入增長 14.2%，但教育厭惡的投資者仍未被其轉型所吸引。

Tianli turnaround fails to sway education-averse investors