The leading Chinese concept stock Quantum 之歌， the "gold digger" behind the "silver economy"?

During the National Day holiday, the stock price of China's leading adult online learning service provider—Quantum 之歌 (QSG.US) rose significantly, outperforming other Chinese concept stocks. By October 8, the stock had surged by 72.41%, closing at $4.00, with the highest single-day gain of 29.63% recorded on October 2.

On the same day, Zacks Investment Research released its first coverage report on Quantum 之歌， providing an in-depth analysis and setting a 12-month target price of $6.00, indicating substantial upside potential from the current price.

The surge in stock price was driven by two main factors: the broad rally in Chinese concept stocks, which significantly increased foreign interest in Chinese assets, and the renewed prominence of Chinese assets in global financial markets amid improving macroeconomic expectations.

The other factor was market optimism about the silver economy. In recent years, as the domestic market shifted toward internal circulation and domestic demand grew, the consumption attitudes and capabilities of the elderly have evolved, revealing the untapped potential of this demographic.

Amid the stock price surge, Quantum 之歌 also announced a special cash dividend. Typically, dividend payouts positively impact stock liquidity and performance, but this move also reflects management's strong confidence in future growth potential. So, what has Quantum 之歌 done right to reach this point?

Behind the Cash Dividend: Quantum 之歌’s Stability Speaks Volumes

On October 1, Quantum 之歌 announced its first special cash dividend since going public. Based on long-term confidence in its performance growth and financial health, its board approved a dividend of $0.067 per ordinary share, with total payouts expected to reach $11 million.

Quantum 之歌 plans to distribute the dividend to ordinary shareholders on November 7, 2024, and to ADS holders on November 15, 2024. Shareholders of record as of October 30, 2024, will be eligible for the dividend.

Quantum 之歌’s ability to implement this dividend policy stems from its solid financials, stable cash flow, and strong profitability, all of which are the result of successful business expansion, user growth, and cost control in recent years.

Against the current macroeconomic backdrop, the pressure to deliver shareholder returns is undeniable. Yet, Quantum 之歌’s decision to proceed with the special cash dividend sends a positive signal, significantly boosting market confidence in its long-term prospects. For investors who prioritize stable cash flow and dividend returns, this is an important consideration.

Quantum 之歌’s financials demonstrate remarkable stability. In fiscal 2024, net cash flow from operating activities reached 283 million yuan, up 20% year-over-year. By the end of the fiscal year, the company’s cash and equivalents, along with short-term investments, totaled 1.026 billion yuan, a 10.27% increase. With zero debt, Quantum 之歌 enjoys greater operational flexibility and autonomy, allowing it to focus on strategic growth initiatives.

In the recently concluded fiscal year 2024, Quantum 之歌 delivered strong growth. Full-year revenue reached 3.8 billion yuan, up 23.2% year-over-year, with adjusted net profit achieving profitability for seven consecutive quarters. Q4 revenue hit 1.0 billion yuan, a 20.7% increase from the previous year.

Thanks to sustained momentum in its core business and improved operational efficiency, Quantum 之歌’s registered user base grew to 127.6 million as of June 30, 2024, maintaining high-quality growth.

This year, Quantum 之歌 focused heavily on the silver economy, investing in building a new ecosystem for elderly services. In August, its subsidiary, Qianchi Academy, invited table tennis player Ni Xialian to serve as a brand ambassador.

Ni Xialian’s display of "passion and perseverance" during the Paris Olympics resonated with the positive, dream-chasing attitude of today’s elderly.

Beyond this, Quantum 之歌 has also ventured into the health and wellness consumer market for seniors. Q4 GMV reached nearly 33.6 million yuan, an 83.3% quarter-over-quarter increase, indicating early success in its silver economy focus.

This year, Quantum 之歌 has delivered multiple "reassurances"—stock price surges, stable dividends, and steady earnings growth—directly benefiting shareholders while enhancing investor confidence and long-term appeal.

Winning Over the Elderly: How?

By shifting its focus to the silver economy, Quantum 之歌 has not only grown its user base but also seen parallel growth in core business revenue (personal online learning services and consumer business).

Q4 personal online learning service revenue rose 25.7% to 906.7 million yuan, up from 721.1 million yuan in Q4 2023. Consumer business revenue surged to 33.3 million yuan from just 3.4 million yuan a year earlier.

This rapid growth stems from Quantum 之歌’s ability to connect with the elderly.

A key driver is the booming adult learning market. According to Frost & Sullivan’s "China Adult Learning Market Report," the market size reached 576.2 billion yuan in 2022 and is projected to hit 1.04 trillion yuan by 2027, with a 12.6% CAGR.

Against this backdrop, Quantum 之歌 has transitioned from a traffic-driven model to a product-centric approach, leveraging diversified offerings and high-quality content to revitalize its brand. Today, its broad and deep course system has earned widespread recognition in the silver market.

For example, Qianchi Academy offers courses like piano, calligraphy, standing meditation, and Baduanjin for seniors. Through live streaming and community interactions, elderly users can engage with experienced instructors from home.

Beyond content, Quantum 之歌 excels in user engagement. Offline events, such as the "Qianchi Calligraphy Competition," enhance user retention and learning outcomes by providing shared experiences.

The "online + offline" learning model has fostered an integrated platform for elderly education. Quantum 之歌 blends traditional arts with digital tech, offering online courses like calligraphy and Baduanjin, alongside offline study tours to places like Jingdezhen and Wudang Mountain, catering to seniors’ "self-enjoyment + social" needs.

At Beijing’s 2024 "Home & Community Elderly Care Autumn Festival," Quantum 之歌 founder and chairman Li Peng announced plans to deepen offline expansion through partnerships, piloting "elderly learning centers" in communities. As the event organizer, Quantum 之歌 garnered coverage from state media like CCTV, People’s Daily, and Xinhua, with CCTV’s "Double Ninth Festival" special highlighting its role in creating joyful experiences for seniors.

In summary, establishing offline community centers, combined with online courses and product sales, helps reach more seniors and expand market reach.

Quantum 之歌’s offline strategy not only leverages its online strengths but also diversifies product offerings, laying the groundwork for penetration into the senior travel market. Plans to develop proprietary products aim to boost margins and competitiveness.

Technologically, Quantum 之歌 demonstrates strong R&D capabilities and foresight. It has launched over 63 smart learning tools as of June 2024, enhancing user engagement.

Its innovative "live streaming +" model breaks traditional education barriers. Real-time interaction with instructors improves learning outcomes, while expanding from "live streaming + courses" to "live streaming + e-commerce" diversifies services.

These efforts validate the vast demand for adult online education and seniors’ spending power, showcasing Quantum 之歌’s market acumen and execution.

Quantum 之歌 Ushers in the "Silver Gold Rush"

The elderly’s "self-enjoyment" and "social" needs are often overlooked. Many seniors seek learning to expand social circles and prove their worth.

As Li Peng noted, future elderly care isn’t just material but also emotional support.

Per the "2024 Elderly Interest Education Marketing Guide," 77.2% of seniors have engaged in interest learning—64.8% for knowledge, 55.1% for quality of life, and 54.3% for social connections.

The "new elderly" have time and energy to pursue spiritual fulfillment beyond material wealth.

While health and fitness courses remain popular, niche courses like etiquette and crafts are gaining traction. This diversification presents both a challenge and an opportunity for Quantum 之歌 to attract non-paying users.

Market demand suggests room for entertainment-focused courses alongside traditional offerings.

From a supply-demand perspective, the silver economy is thriving.

New entrants are innovating to meet diverse elderly needs, while rising spending power fuels demand for high-quality services.

Elderly education is just one entry point. Quantum 之歌 can leverage internet tech and offline scenarios to create a "new lifestyle" for seniors, building a full industry chain with greater profit potential.

Its "online courses + offline tours" model aligns with this vision. The "2024 China Silver Travel Report," co-published with CIC, shows seniors prefer destinations rich in history and nature, favoring integrated travel-learning-wellness programs.

Quantum 之歌 can also learn from global successes, such as the U.S.’s Osher Lifelong Learning Institute and Road Scholar, which blend travel and education for seniors.

Silver travel’s essence lies in education, with "travel" as the means and "learning" as the goal. Merging the two effectively is key.

Times change, and so do needs. The elderly, once overlooked, are now a formidable force in adult education—a demographic service providers can’t ignore.

Source: Meigu Research