Recently, global capital has refocused on Chinese assets, and "nothing but China" is not an empty phrase.

The direct cause of all this is naturally rooted in the significant policy stimulus on September 24th. Foreign investment banks such as Goldman Sachs, UBS, and Morgan Stanley have expressed their optimism for Chinese assets. Among them, Goldman Sachs, known as the "standard-bearer of the foreign bull market," has recently upgraded the Chinese stock market to "overweight" in its research report. It has also raised the target price for MSCI China from 66 to 84 and increased the target price from 4000 points to 4600 points.

The sharp rise in a short period has led to a large amount of profit-taking, with some funds cashing out profits, causing the market to retract. Market volatility has also increased, but this is often the brewing of greater opportunities. The key lies in how to excavate targets with stronger certainty. The author believes that two points are very crucial: whether the company can continue to create value for shareholders and whether it has long-term growth potential.

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Following this logic, a Chinese concept stock focusing on the silver economy - Quantum Song - has come into the author's view.

On October 1st this year, Quantum Song announced its first special cash dividend since its listing, with an expected total dividend payout of about $11 million, to be paid in US dollars. After the dividend information was released, the company's stock price quickly rose, with the highest increase of more than 160% this month, and has already doubled compared to the previous low.

1. Continuously creating value for shareholders

Generally speaking, dividends can demonstrate the company's confidence in its financial situation and help improve the market's expectations for the company's future growth potential and profitability.

Especially in recent years, against the backdrop of complex and changing global economic conditions, companies that can provide stable dividend returns to shareholders are relatively easy to attract investor attention. On the one hand, such companies can provide stable dividend income to shareholders; on the other hand, companies that can provide stable high dividends often have good financial conditions.

These are all likely to have a positive impact on the company's stock price and are also the reasons why high dividend strategies have repeatedly won in the capital market in recent years.

However, isolated dividend events themselves only have a short-term stimulating effect. What can truly attract the capital market over a longer time dimension is whether the company has the ability and willingness to create value for shareholders in the long term.Looking at Quantum Song's past actions, it precisely possesses these two characteristics.

In August of this year, the company's board of directors approved a new stock repurchase plan, which allows for the repurchase of up to $20 million worth of shares within a period of 12 months starting from June 11, 2024, demonstrating the company's management's confidence in future development.

In fact, as early as 2023, Quantum Song had already announced a similar stock repurchase plan, with the same repurchase amount of $20 million and a validity period of 12 months.

From this perspective, Quantum Song's stock repurchase is a rhythmic and continuous strategic arrangement, reflecting the company's high regard for enhancing shareholder value, which naturally requires strong financial support.

In the fiscal year of 2024, the company achieved a revenue of 3.8 billion yuan, a year-on-year increase of 23.2%. Among them, the revenue for the fourth quarter reached 1 billion yuan, a year-on-year increase of 20.7%; the adjusted net profit for the period was 197 million yuan, a year-on-year increase of 114.1%, achieving profitability for seven consecutive quarters.

Of course, this is also closely related to Quantum Song's scientific and efficient cash flow management. In the fiscal year of 2024, the company's net cash flow from operating activities was 283 million yuan, a year-on-year increase of 20%. By the end of the fiscal year, the company's cash and its equivalents and other short-term investments totaled 1.026 billion yuan, a year-on-year increase of 10.27%.

A robust financial condition has laid a good foundation for Quantum Song to continue to reward shareholders and is also an external manifestation of the continuous improvement of the company's fundamentals.

2. Continuously leading in high-growth tracks

As a leading online learning service provider in China, Quantum Song is a practitioner of the concept of lifelong learning, providing opportunities for people of all ages to improve their quality education and personal abilities.

However, unlike most online education companies in the market, Quantum Song does not focus on K12 and vocational education, but concentrates on the interest learning of middle-aged and elderly people. Although this may seem a bit "niche," it is actually a blue ocean market worth hundreds of billions.As the aging population in our country continues to deepen, the "silver economy" has become an important driving force for future macroeconomic growth.

Hu Zuquan, Director and Researcher of the Population Development Research Office of the Economic Forecasting Department of the National Information Center, previously stated that the current scale of our country's silver economy is about 7 trillion yuan, accounting for about 6% of the same period's GDP. It is expected that by 2035, the scale of our country's silver economy will reach about 30 trillion yuan, accounting for about 10% of the same period's GDP.

Looking deeper, the industrial chain of the silver economy is quite extensive, including medical care, elderly care, tourism, cultural entertainment, and many other sub-directions. Education, as a key nutrient for the spiritual needs of middle-aged and elderly people, is also an important part of the silver economy.

According to the "2024-2029 China Elderly Education Industry Market Research Analysis and Development Trend Forecast Research Report" released by the China Research and Huaxia Industry Research Institute, the scale of China's middle-aged and elderly education market in 2023 is about 243 billion yuan.

Quantum Song started to layout in this area as early as 2019, and in August of this year, it released a new mission (to help life be beautiful and long-lasting - Live Better, Live Longer) and vision (to become a long-term partner loved and trusted by adults - Become a Long-term Partner Loved and Trusted by Adult Users), further clarifying its strategic focus in the silver economy field.

In this trillion-level blue ocean market, there is no domestic giant born with absolute dominance, and Quantum Song, as a pioneer, is more likely to benefit from the growth dividends of the industry.

To meet the differentiated learning needs of hundreds of millions of middle-aged and elderly people, Quantum Song has developed a series of interest learning courses, including but not limited to calligraphy, Chinese painting, piano, and Baduanjin. As of June 30, 2024, the total number of registered users of Quantum Song is 127.6 million.

In addition, Quantum Song has also innovatively launched a senior study tour project, extending the teaching scene to a broader natural environment through the "cultural tourism + study tour" approach, enhancing the interest in learning, which can meet the needs of middle-aged and elderly people and their social needs, making learning a way of life.

The expansion of boundaries has brought more possibilities for the growth of Quantum Song, but it has also inevitably faced more challenges. Although Quantum Song is an old hand in education, it is undoubtedly a latecomer in the field of cultural tourism.

The elderly may not be highly receptive to new technologies and services, and Quantum Song needs to improve their acceptance and participation in new businesses through effective market education and user guidance. At the same time, how to ensure the quality of study tour projects and meet the learning needs of different levels of the elderly also requires Quantum Song to work hard to study.From a long-term perspective, Quantum Song will not be a mere learning platform. As stated by Li Peng, the founder and chairman of Quantum Song Group, the company will continue to develop and promote a variety of consumer products tailored for middle-aged and elderly users. This process will not be achieved overnight, but the potential it brings to the imagination is beneficial for enhancing the company's long-term valuation center.

Looking to the future, Quantum Song has also gained recognition from professional institutions. On October 2nd, Zacks Investment Research provided an in-depth analysis of Quantum Song in its initial coverage report. As a financial database specializing in stock research and market data, Zacks Investment Research is well-known for its extensive array of earnings per share (EPS) forecasts. The model predicts that Quantum Song's adjusted earnings per share (EPS) for the fiscal years 2025 and 2026 will be $0.88 and $0.83, respectively. At the same time, it believes that during the transformation period, Quantum Song is expected to maintain stable revenue and optimize its cost structure to achieve higher profit margins.

Zacks Investment Research believes that as the market's understanding of Quantum Song's business model transformation, long-term growth prospects, competitive position, and valuation differences deepens, the stock price is expected to rebound. Coupled with the significant discount on the company's stock price since its listing, which provides a substantial margin of safety, Zacks Investment Research has set a target price of $6.00 for Quantum Song within 12 months, representing a 50% increase from the closing price on October 8th.

In conclusion, amidst the tide of globalization, the appeal of Chinese assets is increasingly highlighted, becoming a focal point of attention for global investors. With a series of policy stimuli and continuous improvement in the market environment, coupled with Federal Reserve rate cuts, the positive attitude of foreign capital towards Chinese assets has been translated into actual action.

Although short-term profit-taking has slowed this trend, the reality of macroeconomic policy adjustments, market environment improvements, and investor confidence enhancement has not changed. Chinese concept stocks, as a value lowland in the global capital market, remain an indispensable sector for long-term capital allocation.

Quantum Song, with its deep cultivation in the silver economy, has demonstrated its ability to create value for shareholders and its long-term growth potential. Despite facing market volatility and challenges in new business areas, Quantum Song's robust financial position and gradually implemented diversified strategy have added a degree of certainty for itself.