On August 27, NEUedu (9616.HK) released its mid-term results.

During the reporting period, the group's total revenue reached 0.968 billion, a year-on-year growth of 5.41%; gross profit was approximately 0.511 billion yuan, an increase of 11.3% compared to the same period last year. Considering the current macroeconomic environment, this is still considered a solid performance.

This performance can be summarized in two key words: 'towards depth' and 'towards distance'.

'Towards depth': Advancing the 'One Body, Two Wings' business

NEUedu adheres to the 'One Body, Two Wings' business structure, with higher education as its core, while actively developing continuing education services and education resource output business.

Let's analyze the key operational data of the higher education business in depth:

1. In terms of higher education services, NEUedu's revenue from full-time academic education reached approximately 0.803 billion yuan, a year-on-year increase of 7.2%, accounting for 82.9% of the group's total revenue, highlighting its pivotal position in the group's business.

2. As of June 30, 2024, the total number of students in the three colleges was approximately 0.057 million, a year-on-year increase of about 7.5%, reaching a historical high. In the first half of the year, campus utilization rate increased by 2.7% to 93.7%.

In terms of the number of students, Dalian University, Chengdu University, and Guangdong University have all achieved significant growth. Especially, the number of undergraduate and adult education students at Dalian University increased by over 70% and 12% respectively.

If we look deeper into the good operational data, the steady improvement in education quality and brand influence is the main reason behind it. Dalian University added a new undergraduate program - Network Space Security in the 2024/2025 academic year; it has accumulated 7 national-level first-class undergraduate program construction sites, 8 provincial-level first-class undergraduate program construction sites, 2 national-level first-class undergraduate courses, and 115 provincial-level first-class undergraduate courses, becoming the only private university in China that has won the national-level teaching achievement first prize twice. Chengdu University has accumulated 1 national-level first-class undergraduate program construction site, 6 provincial-level first-class undergraduate program construction sites, and 1 national-level first-class undergraduate course; Guangdong University has accumulated 3 provincial-level first-class undergraduate program construction sites, 1 national-level first-class undergraduate course, and 20 provincial-level first-class undergraduate courses.

In addition, Neusoft Education's education resource output business and continuing education services, as the two wings of the group, have also demonstrated vigorous vitality.

Regarding the education resource output business, Neusoft Education has created an innovative '4S' product service model through professional co-construction with industrial colleges, smart education platforms and teaching content, and solutions for laboratory practices. According to the mid-term performance report, in the first half of 2024, Neusoft Education deepened its professional co-construction cooperation and has already established co-construction partnerships with 54 institutions, with a total of 224 cooperation projects covering approximately 0.02 million students. In addition, during the reporting period, the group increased its investment in and construction of smart education platforms and laboratories. In the first half of 2024, Neusoft Education launched the Metaverse Creative Sharing Platform - OpenNEU, the all-dimensional innovation quality development platform, the education quality monitoring and assessment digital platform, and the integrated smart education platform. As of June 30, 2024, the group has multiple smart education platforms and software products, such as the Hongmeng OpenHarmony XinChuang lab, and the intelligent connected car lab, covering the five major advantageous professional clusters of Neusoft Education.

The continuing education services cover 2B training services, 2C training services, degree continuing education, and the newly developed elderly education business. During the reporting period, the group was once again approved as a national-level high-skilled talent training base in 2020, and was also approved as the pilot demonstration project for the 2023 Industrial Internet Security Talent Cultivation by the Ministry of Industry and Information Technology. The group implemented 42 2B training projects for 33 institutions in 12 provincial regions across the country, covering nearly 3000 students. As for the 2C training services, the number of registered users for Neusoft Education Online and Neusoft IT Cloud School has reached approximately 2.3 million, with around 0.012 million trainees. The group has established cooperative relationships with over 2000 well-known companies such as Neusoft, IBM, JD.com, Alibaba, and Baidu. Guosheng Securities Research Institute pointed out that the long-term bullish outlook on the complementary 2B+2C is bringing business growth to Neusoft Education.

Through the deepening of the 'one body, two wings' strategic layout, Neusoft Education has achieved the 'advancement' of its business, consistently improving the scale and quality of income, laying a solid foundation for the future development of Neusoft Education.

Xiang Yuan: Integrating innovation and extending the boundaries of the business.

During the reporting period, the group's business layout underwent significant changes - the medical and health care business was officially included in the consolidation. In the first half of the year, through a series of strategic mergers and acquisitions, Neusoft Education successfully integrated Neusoft Health and its subsidiary companies, achieving a leap from the field of education to the medical care and health domain. This marks the preliminary establishment of the 'Education - Medical Care - Health' integrated business framework, and also sets a new model for cross-border integration.

Specifically, the group relies on the deep accumulation and unique advantages in the education and medical health fields, cleverly integrating education, medical, and health care services, forming a new business format that is stable, mutually beneficial, and efficient, based on the interconnection of education, medical care, and care.

The new business format is an organically integrated whole that empowers each other:

"Education" and "medical" empower each other: Hospitals and nursing homes have become the practice and training bases for three universities under Neuedu, promoting the deep integration of education and medical care and creating a fertile ground for nurturing versatile talents. The schools will provide talents for hospitals and nursing homes.

"Education" and "care" empower each other: Elderly education enriches the elderly's health life and attracts new customers for health care life.

Hospitals as the last line of defense: Provide strong medical guarantees for the development of elderly education and nursing home business.

It is worth mentioning that the group attaches great importance to the spiritual and cultural life of the elderly, and is eager to break the routine and build a unique "different elderly university". NEUedu has focused on the "digital + art + health" field and developed the NEUedu Fenghuang College, an integrated and distinctive elderly education product covering education, medical, nursing, health, and travel. NEUedu Fenghuang College implements the characteristic elderly education concept of "LIFECARES" and has offered feature courses in the three major areas of "AI and artistic creation", "health and rehabilitation", and "spiritual health tours".

It can be seen that NEUedu has constructed a diversified comprehensive service platform covering the entire life cycle for the elderly through integrated innovation, fully meeting the diverse and personalized needs of the elderly. This strategy not only responds to the national policy orientation but also accurately captures market opportunities.

According to the data from iMedia Consulting, the market scale of China's silver-haired economy is continuously expanding, and it is expected to exceed 20 trillion yuan by 2027. In this context, the integration of "education + technology + medical care" will undoubtedly become the key driving force for Neuedu's development, helping it expand its business boundaries in the new market blue ocean and seize the valuable opportunities given by the era.