China Galaxy Securities: Domestic AI Wave Accelerating Focus on AI + Education and Platform Leading Value Reevaluation.

China Galaxy Securities released a research report stating that after the holiday, leading education companies connected to Deepseek, driving a large increase in the AI + education sector. It is recommended to focus on leading companies in the education industry with technology genes, and also to focus on companies with high-quality teaching data accumulation. In terms of tourism, travel demand and AI technology iteration drive the value of NETDRAGON in the Hong Kong consumer internet sector. In terms of chain services, leading catering brands have begun adjusting their competitive strategies, with signals of stabilization in the catering industry. Two sessions after the policy stimulus situation should be monitored, as improvements in same-store sales and average unit price resonance may lead to substantial performance elasticity in the catering sector. The main views of China Galaxy Securities are as follows: Industry performance This week, SW social service industry's rise and fall range was +2.5%, including education (+5.2%), professional services (+1.9%), tourism and scenic services (+1.7%), hotel catering (+2.2%). Education: Leading education companies connecting to Deepseek, focusing on leading companies with teaching data accumulation and Know-How capabilities Since the holiday, leading education companies such as TAL and Youdao announced their connection to the Deepseek model, driving a large increase in the AI + education sector. The core logic lies in the rapid development of large-scale open-source model iterations, optimizing efficiency and cost, downstream application-class products are expected to quickly become popular. The firm believes: 1) Current AI + education applications mainly focus on the tool link, and it is still difficult to overturn the teaching form and education governance model in the short term. Taking the overseas market as an example, top online education platforms in the United States such as Duolingo and Chegg have connected to the GPT-4 model, mainly used for retrieval and summarization, and content generation. From the subject type perspective, it is mainly focused on language learning applications; 2) There is no threshold for connecting to a large model itself, and the education application that can become popular is expected to appear in companies with high-quality teaching data accumulation and industry Know-How capabilities. It is recommended to focus on leading companies in the education industry with technology genes such as TAL Education (self-developed Jiuzhang large model and connected to Deepseek, leading market share in intelligent learning machines), Doushen (Beijing) Education & Technology Inc. (developed AI applications based on Zhifu large model for 24 years), and also recommended to pay attention to companies with high-quality teaching data accumulation such as New Oriental, Xueda (Xiamen) Education Technology Group, TIANLI INT HLDG. Tourism: Travel demand + AI technology iteration drive, the value of NETDRAGON in Hong Kong consumer internet is expected to be revalued Post-holiday travel consumption enters the off-season, but the issuance of cultural and tourism consumption vouchers in various places (Shanghai issued 90 million "Leisure Shanghai" tourism consumption vouchers) + inbound travel visa-free policy (since the end of the Spring Festival holiday, on average, Chengdu daily foreign tourists increased by 10% compared to the Spring Festival) is expected to provide increments for the off-season. This week, Hong Kong's consumer internet NETDRAGON generally rose, with Ctrip and Tongcheng rising by 4.4% and 3.6% respectively, and Meituan rising by 10.3%. On the one hand, driven by policy expectations, on the other hand, with the emergence of DeepSeek, the space for imagination in reducing costs and increasing efficiency, iterating business models, and exploring massive user and data value realization in domestic internet platform leaders will further open up. Recommended Ctrip Group, TONGCHENGTRAVEL, pay attention to Meituan. Chain services: There are signals of stabilization in the internal turmoil of the catering industry, pay attention to the policy stimulus situation after the two sessions Since the fourth quarter of 2024, the firm has observed that leading catering brands have begun adjusting their competitive strategies. For example, YUM CHINA (YUMC.N; 09987), which belongs to KFC, raised the prices of some SKUs for the first time in two years at the end of 2024, and Heytea announced in February that it would stop internal turmoil in prices and scale, focusing on differentiation and innovation. The firm believes that the reason for the turning point signal in the internal turmoil in the catering industry is that the results of the industry's internal competitive competition over the past two years have been minimal, and both brand momentum and franchisee interests have been damaged. More importantly, the pursuit of quality and price by consumers now lies in product quality, innovation rather than price. Therefore, the firm believes that the current adjustment of competitive strategies by leading brands in the industry represented by KFC and Heytea is significant for slowing down the internal competition trend in the catering industry, combined with the central government's prioritizing the expansion of domestic demand and boosting consumption. Policies may be introduced after the two sessions, and improvements in same-store sales and average unit price resonance, the catering sector's performance elasticity is considerable. It is recommended to pay attention to YUM CHINA, HAIDILAO, Heytea, GUMING. Risk warning Risks of natural disasters; risks of policy progress lower than expected; risks of macroeconomic downturn.