Summary This summary outlines China East Education Holdings Limited's key financial and operating data for the six months ended June 30, 2024, showing growth in revenue and profit, but a decrease in new student enrollments and school count Key Financial and Operating Data for the Six Months Ended June 30, 2024 | Indicator | 2024 | 2023 | Change (Increase/(Decrease)) | | :--- | :--- | :--- | :--- | | New Student Enrollments and New Customer Registrations | 78,009 | 84,552 | (7.7%) | | Average Student Enrollments and Average Customer Registrations | 144,793 | 147,276 | (1.7%) | | Revenue (RMB million) | 1,983 | 1,953 | 1.6% | | Gross Profit (RMB million) | 1,051 | 997 | 5.4% | | Net Profit (RMB million) | 272 | 204 | 33.2% | | Adjusted Net Profit (RMB million) | 278 | 176 | 57.9% | | Adjusted EBITDA (RMB million) | 715 | 633 | 13.0% | | Number of Schools and Centers (at period end) | 234 | 245 | (11) | | Net Assets (RMB million) (at period end) | 5,496 | 5,608 | (2.0%) | | Total Assets (RMB million) (at period end) | 9,259 | 9,291 | (0.3%) | [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents China East Education Holdings Limited's unaudited condensed consolidated financial statements for the six months ended June 30, 2024, including the statement of profit or loss and other comprehensive income and the statement of financial position, providing an overview of the company's operating results and financial position during the reporting period [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2024, the company's revenue and gross profit both increased, profit for the period significantly improved, and basic earnings per share also rose accordingly Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 1,983,324 | 1,953,023 | | Cost of revenue | (932,200) | (955,629) | | Gross profit | 1,051,124 | 997,394 | | Other income and expenses | 57,501 | 68,485 | | Other gains and losses | 24,472 | 57,469 | | Selling expenses | (464,212) | (513,019) | | Administrative expenses | (255,812) | (255,894) | | Research and development expenses | (5,425) | (7,902) | | Finance costs | (61,578) | (71,570) | | Profit before tax | 346,070 | 274,963 | | Income tax expense | (74,557) | (71,128) | | Profit and total comprehensive income for the period | 271,513 | 203,835 | | Basic earnings per share (RMB cents) | 12.46 | 9.36 | | Diluted earnings per share (RMB cents) | 12.45 | 9.19 | [Condensed Consolidated Statement of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the company's non-current assets increased, net current assets decreased, and total assets and net assets slightly reduced, but the overall financial structure remained stable Condensed Consolidated Statement of Financial Position (at period end) | Indicator | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | **Non-current assets** | | | | Property and equipment | 3,163,417 | 3,080,278 | | Right-of-use assets | 2,225,739 | 2,225,672 | | Total other non-current assets | 94,514 | 77,269 | | **Total non-current assets** | **5,533,670** | **5,383,219** | | **Current assets** | | | | Inventories | 68,415 | 67,893 | | Trade and other receivables | 385,167 | 323,558 | | Other financial assets | 625,094 | 364,196 | | Time deposits | 1,301,481 | 1,551,441 | | Cash and cash equivalents | 1,343,895 | 1,515,313 | | Total other current assets | 1,647 | 5,513 | | **Total current assets** | **3,725,699** | **3,907,914** | | **Current liabilities** | | | | Trade and other payables | 611,739 | 681,433 | | Tax liabilities | 77,275 | 62,634 | | Lease liabilities | 344,227 | 265,397 | | Contract liabilities | 1,464,236 | 1,323,910 | | **Total current liabilities** | **2,497,477** | **2,333,374** | | **Net current assets** | **1,228,222** | **1,574,540** | | **Total assets less current liabilities** | **6,761,892** | **6,957,759** | | **Total equity** | **5,495,546** | **5,607,563** | | **Non-current liabilities** | | | | Lease liabilities | 1,206,180 | 1,307,764 | | Contract liabilities | 37,953 | 17,981 | | Government grants | 2,823 | 3,924 | | Deferred tax liabilities | 19,390 | 20,527 | | **Total non-current liabilities** | **1,266,346** | **1,350,196** | | **Net assets** | **5,495,546** | **5,607,563** | [Notes to the Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering the company's general information, accounting policies, revenue and segment data, various income and expense breakdowns, dividends, earnings per share, and major balance sheet item changes [General Information](index=5&type=section&id=General%20Information) China East Education Holdings Limited was incorporated in the Cayman Islands in 2018, listed on the HKEX in 2019, primarily operates vocational education institutions, and presents its financial statements in RMB - The company was incorporated in the Cayman Islands on October 4, 2018, and listed on the Main Board of the Stock Exchange of Hong Kong on June 12, 2019[9](index=9&type=chunk) - The company's principal business is operating vocational education institutions, with Mr. Wu Junbao, Mr. Wu Wei, and Mr. Xiao Guoqing as the ultimate controlling parties[9](index=9&type=chunk) - The condensed consolidated financial statements are presented in RMB, which is the functional currency of the company and its subsidiaries[9](index=9&type=chunk) [Basis of Preparation](index=5&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with HKAS 34 and the Listing Rules, using the historical cost basis, consistent with the 2023 annual consolidated financial statements, except for the initial application of certain revised HKFRSs - The condensed consolidated financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of Appendix D2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[10](index=10&type=chunk) - The statements are prepared on the historical cost basis, except for certain financial instruments measured at fair value[10](index=10&type=chunk) [Significant Accounting Policies](index=5&type=section&id=Significant%20Accounting%20Policies) Several revised HKFRSs were first applied during this interim period, but these revisions had no significant impact on the Group's financial position and performance for the current and prior periods - The Group first applied amendments to HKFRS 16 (Revised) Lease Liabilities in a Sale and Leaseback, HKAS 1 (Revised) Classification of Liabilities as Current or Non-current, and other amendments[11](index=11&type=chunk) - The application of the amendments to HKFRSs had no significant impact on the Group's financial position and performance for the current and prior periods[11](index=11&type=chunk) [Revenue and Segment Information](index=6&type=section&id=Revenue%20and%20Segment%20Information) The Group primarily provides vocational education services in China and reorganized its operating segments during the period, integrating Meishi College into Culinary Technology, reclassifying Omic Western Pastry and Culinary Education, integrating Huaxin Zhiyuan into Information Technology and Internet Technology, reclassifying Wantong Auto Education, and reporting the Fashion and Beauty segment independently, with revenue mainly derived from tuition and service fees - The Group is principally engaged in providing vocational education services in China, and revenue refers to service income from tuition and service fees net of sales-related taxes[12](index=12&type=chunk) - The internal reporting structure was reorganized during the period, integrating Meishi College into New East Culinary Education, reclassifying Omic Western Pastry and Culinary Education as Western Pastry and Culinary, integrating Huaxin Zhiyuan DT Talent Training Base into Xinhua Computer Education, reclassifying Wantong Auto Education as Auto Services, and reporting the Fashion and Beauty segment independently[12](index=12&type=chunk) Segment Revenue for the Six Months Ended June 30, 2024 (RMB thousand) | Segment | External Sales | Inter-segment Sales | Segment Revenue | | :--- | :--- | :--- | :--- | | Culinary Technology | 919,295 | 4,018 | 923,313 | | Western Pastry and Culinary | 159,280 | – | 159,280 | | Information Technology and Internet Technology | 378,229 | – | 378,229 | | Auto Services | 449,163 | – | 449,163 | | Fashion and Beauty | 40,481 | – | 40,481 | | Other Miscellaneous Businesses | 36,876 | 61,512 | 98,388 | | Eliminations | – | (65,530) | (65,530) | | **Total** | **1,983,324** | **–** | **1,983,324** | - Almost all of the Group's non-current assets are located in China, and no single customer contributed more than **10%** of total revenue[17](index=17&type=chunk) [Other Income and Expenses](index=9&type=section&id=Other%20Income%20and%20Expenses) For the six months ended June 30, 2024, total other income and expenses amounted to RMB 57,501 thousand, a decrease from RMB 68,485 thousand in the prior year, mainly due to reduced unconditional government grants and interest income from time deposits and bank balances Details of Other Income and Expenses (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Government grants related to assets | 1,704 | 708 | | Unconditional government grants | 10,056 | 16,478 | | Interest income – time deposits and bank balances | 43,937 | 48,029 | | Interest income – entrusted loan to an associate | 1,157 | 2,671 | | Others | 647 | 599 | | **Total** | **57,501** | **68,485** | [Other Gains and Losses](index=9&type=section&id=Other%20Gains%20and%20Losses) For the six months ended June 30, 2024, other gains and losses recorded a net gain of RMB 24,472 thousand, a significant decrease from RMB 57,469 thousand in the prior year, primarily impacted by a reduction in net exchange gains Details of Other Gains and Losses (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Net gain from fair value changes of other financial assets at fair value through profit or loss | 20,148 | 11,281 | | Net (loss) gain on disposal of property and equipment | (8,125) | 366 | | Gain on termination of lease agreements | 6,708 | 1,751 | | Net exchange gain | 5,741 | 44,071 | | **Total** | **24,472** | **57,469** | [Finance Costs](index=9&type=section&id=Finance%20Costs) For the six months ended June 30, 2024, finance costs amounted to RMB 61,578 thousand, primarily interest expense on lease liabilities, a decrease from RMB 71,570 thousand in the prior year Finance Costs (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Interest expense on lease liabilities | 61,578 | 71,570 | [Income Tax Expense](index=10&type=section&id=Income%20Tax%20Expense) For the six months ended June 30, 2024, income tax expense was RMB 74,557 thousand, a slight increase from RMB 71,128 thousand in the prior year, mainly comprising current tax for China corporate income tax Details of Income Tax Expense (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | China corporate income tax – current tax | 77,732 | 75,305 | | China corporate income tax – over-provision in prior years | (1,529) | (1,186) | | Deferred tax | (1,646) | (2,991) | | **Total** | **74,557** | **71,128** | [Profit for the Period](index=10&type=section&id=Profit%20for%20the%20Period) For the six months ended June 30, 2024, profit for the period was RMB 271,513 thousand, a significant increase from RMB 203,835 thousand in the prior year, mainly due to stable staff costs and reduced depreciation Details of Profit for the Period Deductions (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Directors' remuneration | 1,889 | 1,657 | | Other staff costs – salaries and other allowances | 628,889 | 622,544 | | Other staff costs – contributions to retirement benefit schemes | 77,335 | 76,358 | | Other staff costs – equity-settled share-based payment expenses | 12,449 | 16,363 | | **Total staff costs** | **720,562** | **716,922** | | Depreciation of property and equipment | 157,218 | 159,820 | | Depreciation of right-of-use assets | 145,717 | 158,521 | | **Total depreciation** | **302,935** | **318,341** | | Less: capitalized in construction in progress | (2,753) | (4,746) | | **Net depreciation** | **300,182** | **313,595** | - For the six months ended June 30, 2024, total share option expenses recognized amounted to approximately **RMB 12.55 million**, a decrease from RMB 16.496 million in the prior year[22](index=22&type=chunk) [Dividends](index=11&type=section&id=Dividends) The Board decided not to declare an interim dividend for the six months ended June 30, 2024. The company paid a final dividend of HKD 0.2 per share for the year ended December 31, 2023, in June 2024 - Subsequent to the end of the interim period, the Board decided not to declare a dividend for the interim period ended June 30, 2024 (for the six months ended June 30, 2023: nil)[23](index=23&type=chunk) - On June 7, 2024, a final dividend of **HKD 0.2** per share (approximately RMB 0.182) for the year ended December 31, 2023, totaling approximately **RMB 396.08 million**, was declared to the company's owners[23](index=23&type=chunk) [Earnings Per Share](index=11&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2024, basic earnings per share were RMB 12.46 cents, and diluted earnings per share were RMB 12.45 cents, both showing an increase from the prior year Earnings Per Share Calculation Data | Indicator | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Profit for the purpose of calculating basic and diluted earnings per share (profit attributable to owners of the company for the period) | 271,513 | 203,835 | | Weighted average number of ordinary shares for basic earnings per share | 2,178,851,302 | 2,178,701,777 | | Effect of dilutive potential ordinary shares – share options | 2,690,955 | 38,469,672 | | Weighted average number of ordinary shares for diluted earnings per share | 2,181,542,257 | 2,217,171,449 | [Trade and Other Receivables](index=12&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2024, total trade and other receivables amounted to RMB 385,167 thousand, an increase from RMB 323,558 thousand as of December 31, 2023, mainly due to growth in trade receivables and other receivables Details of Trade and Other Receivables (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade receivables – government | 19,046 | 18,759 | | Trade receivables – others | 51,592 | 29,592 | | **Total trade receivables** | **70,638** | **48,351** | | Total other receivables | 314,529 | 275,207 | | **Total** | **385,167** | **323,558** | Aging Analysis of Trade Receivables (RMB thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 3 months | 45,914 | 31,428 | | Over 3 months but within 12 months | 23,311 | 15,956 | | Over 1 year | 1,413 | 967 | | **Total** | **70,638** | **48,351** | - The Group's management believes that all trade receivables balances overdue for more than **90 days** are not considered to be in default, as they are receivables from local governments in China with extremely low credit risk[27](index=27&type=chunk) [Other Financial Assets](index=14&type=section&id=Other%20Financial%20Assets) As of June 30, 2024, total other financial assets amounted to RMB 675,094 thousand, a significant increase from RMB 444,196 thousand as of December 31, 2023, mainly due to the growth in other financial assets at fair value through profit or loss, particularly structured deposits Details of Other Financial Assets (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Other financial assets at fair value through profit or loss – unquoted fund investments | 369,653 | 352,446 | | Other financial assets at fair value through profit or loss – structured deposits | 255,441 | 11,750 | | **Total other financial assets at fair value through profit or loss** | **625,094** | **364,196** | | Other financial assets at amortized cost – entrusted loan to an associate | 50,000 | 80,000 | | **Total** | **675,094** | **444,196** | - The entrusted loan to an associate (Anhui Xinhua Holdings Group Investment Co., Ltd., controlled by Mr. Xiao Guoqing) is **RMB 50 million**, with a fixed annual interest rate of **7%**, maturing on December 31, 2025[29](index=29&type=chunk) [Trade and Other Payables](index=15&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2024, total trade and other payables amounted to RMB 611,739 thousand, a decrease from RMB 681,433 thousand as of December 31, 2023, mainly due to reductions in payables for property and equipment and salaries payable Details of Trade and Other Payables (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade payables | 138,499 | 123,804 | | Payables for property and equipment | 171,590 | 202,182 | | VAT and other taxes payable | 15,250 | 6,810 | | Salaries payable | 140,609 | 202,549 | | Discretionary subsidies collected on behalf of students | 29,020 | 33,047 | | Miscellaneous deposits collected from students – within 12 months | 66,815 | 62,753 | | Other payables | 49,956 | 50,288 | | **Total** | **611,739** | **681,433** | - The credit period for trade creditors is generally **90 days**, and as of June 30, 2024, trade payables within 90 days amounted to **RMB 138,499 thousand**[31](index=31&type=chunk) [Share Capital](index=16&type=section&id=Share%20Capital) As of June 30, 2024, the company's authorized share capital was HKD 380,000, with 2,178,851,302 shares issued, and the share capital amount remained stable Changes in Share Capital (RMB thousand) | Item | Number of Shares | Share Capital HKD | Presented in Condensed Consolidated Financial Statements RMB thousand | | :--- | :--- | :--- | :--- | | Authorized: as of June 30, 2024 | 3,800,000,000 | 380,000 | - | | Issued: as of January 1, 2023 | 2,176,465,802 | 217,646 | 192 | | New shares issued upon exercise of share options (for the six months ended June 30, 2023) | 2,273,500 | 227 | – | | As of June 30, 2024 | 2,178,851,302 | 217,885 | 192 | - During the six months ended June 30, 2023, **2,273,500** share options were exercised at a subscription price of **HKD 2.25** per share, resulting in the issuance of **2,273,500** new ordinary shares[33](index=33&type=chunk) [Capital Commitments](index=16&type=section&id=Capital%20Commitments) As of June 30, 2024, the company's capital expenditures contracted but not yet provided for in the condensed consolidated financial statements amounted to RMB 472,581 thousand, primarily for the acquisition of property and equipment and leased land Capital Commitments (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Capital expenditures contracted but not yet provided for in the condensed consolidated financial statements for the acquisition of property and equipment and leased land | 472,581 | 485,613 | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's detailed discussion and analysis of the company's business and financial performance for the six months ended June 30, 2024, including business review, operating data, financial review, investment strategy, and future outlook, outlining the company's strategic direction and risk management measures [Business Review](index=17&type=section&id=Business%20Review) The company is a leading player in China's vocational skills education sector, particularly in culinary technology, information technology and internet technology, and auto services, operating 234 schools and centers in mainland China and Hong Kong as of June 30, 2024, and undergoing business segment reorganization during the period to streamline operations [Business Segments](index=17&type=section&id=Business%20Segments) The Group reorganized its business segments during the period, integrating Meishi College into Culinary Technology, Huaxin Zhiyuan into Information Technology and Internet Technology, reclassifying Omic Western Pastry and Culinary Education as Western Pastry and Culinary, and establishing Fashion and Beauty as an independent segment to optimize operations - The Group reorganized its business, integrating Meishi College into New East Culinary Education under the Culinary Technology segment, Huaxin Zhiyuan DT Talent Training Base into Xinhua Computer Education under the Information Technology and Internet Technology segment, and reclassifying Omic Western Pastry and Culinary Education as the Western Pastry and Culinary segment[36](index=36&type=chunk) Overview of Reorganized Segments and Brands | Segment and Brand | Number of Schools/Centers | Description | | :--- | :--- | :--- | | Culinary Technology (New East Culinary Education) | 75 | Offers comprehensive culinary training courses, teaching traditional Chinese dishes and classic Chinese and Western cooking skills | | Culinary Technology (Meishi College) | 18 | Provides personalized culinary experience services | | Western Pastry and Culinary (Omic Western Pastry and Culinary Education) | 36 | Offers courses in baking, desserts, Western cuisine, bartending, and barista training | | Information Technology and Internet Technology (Xinhua Computer Education) | 38 | Provides training courses related to information technology and internet technology | | Information Technology and Internet Technology (Huaxin Zhiyuan DT Talent Training Base) | 19 | Offers short-term information technology and internet technology courses for college and university students | | Auto Services (Wantong Auto Education) | 41 | Provides practical training in auto repair skills and auto business | | Fashion and Beauty (Omandi Fashion and Beauty Education) | 7 | Focuses on cultivating highly skilled fashion and beauty professionals | [Operating Data Summary](index=20&type=section&id=Operating%20Data%20Summary) This section summarizes operating data for the six months ended June 30, 2024, including new student enrollments, average student enrollments, tuition/service fee ranges, and graduate referral employment and entrepreneurship rates, showing an overall decrease in new enrollments but strong growth in Fashion and Beauty, and high employment rates for long-term course graduates [New Student Enrollments and New Customer Registrations](index=20&type=section&id=New%20Student%20Enrollments%20and%20New%20Customer%20Registrations) For the six months ended June 30, 2024, the Group's total new student enrollments and new customer registrations were 78,009, a year-on-year decrease of 7.7%, with the Fashion and Beauty segment achieving a significant growth of 154.6%, while Culinary Technology, Western Pastry and Culinary, and Information Technology and Internet Technology segments experienced declines New Student Enrollments and New Customer Registrations (For the six months ended June 30) | Segment and Brand | 2024 | 2023 | Change (Increase/(Decrease)) | | :--- | :--- | :--- | :--- | | Culinary Technology Subtotal | 34,682 | 39,068 | (11.2%) | | Western Pastry and Culinary Subtotal | 7,549 | 8,666 | (12.9%) | | Information Technology and Internet Technology Subtotal | 13,192 | 14,835 | (11.1%) | | Auto Services Subtotal | 19,716 | 20,457 | (3.6%) | | Fashion and Beauty Subtotal | 2,870 | 1,526 | 88.1% | | **Group Total** | **78,009** | **84,552** | **(7.7%)** | - New student enrollments for long-term courses in Fashion and Beauty increased by **154.6%**, with courses lasting one to two years growing by **208.7%**[40](index=40&type=chunk) [Average Student Enrollments and Average Customer Registrations](index=22&type=section&id=Average%20Student%20Enrollments%20and%20Average%20Customer%20Registrations) For the six months ended June 30, 2024, the Group's total average student enrollments and customer registrations were 144,793, a year-on-year decrease of 1.7%, with the Fashion and Beauty segment's average enrollments increasing by 144.2%, while Culinary Technology and Information Technology and Internet Technology segments experienced declines Average Student Enrollments and Customer Registrations (For the six months ended June 30) | Segment and Brand | 2024 | 2023 | Change (Increase/(Decrease)) | | :--- | :--- | :--- | :--- | | Culinary Technology Subtotal | 57,013 | 60,228 | (5.3%) | | Western Pastry and Culinary Subtotal | 4,638 | 4,594 | 1.0% | | Information Technology and Internet Technology Subtotal | 39,590 | 42,231 | (6.3%) | | Auto Services Subtotal | 40,143 | 38,827 | 3.4% | | Fashion and Beauty Subtotal | 3,409 | 1,396 | 144.2% | | **Group Total** | **144,793** | **147,276** | **(1.7%)** | - Average student enrollments for long-term courses in Fashion and Beauty increased by **189.9%**, with courses lasting one to two years growing by **457.2%**[43](index=43&type=chunk) [Tuition/Service Fees](index=24&type=section&id=Tuition%2FService%20Fees) For the six months ended June 30, 2024, long-term course tuition fees across segments ranged from RMB 10,800-180,000 per year, and short-term course fees ranged from RMB 500-68,000 per course, with some segments experiencing tuition fee adjustments Tuition/Service Fee Ranges (For the six months ended June 30) | Segment and Brand | Course | 2024 Tuition/Service Fee Range (RMB) | 2023 Tuition/Service Fee Range (RMB) | | :--- | :--- | :--- | :--- | | Culinary Technology (New East & Meishi College) | Long-term courses | 10,800-180,000/year | 10,800-115,000/year | | | Short-term courses | 500-68,000/course | 500-68,000/course | | Western Pastry and Culinary (Omic) | Long-term courses | 46,000-72,000/year | 46,000-72,000/year | | | Short-term courses | 800-39,000/course | 800-39,000/course | | Information Technology and Internet Technology (Xinhua Computer & Huaxin Zhiyuan) | Long-term courses | 12,600-53,800/year | 7,000-68,000/year | | | Short-term courses | 999-29,800/course | 999-53,800/course | | Auto Services (Wantong) | Long-term courses | 10,800-68,800/year | 6,800-38,800/year | | | Short-term courses | 800-37,400/course | 800-37,400/course | | Fashion and Beauty (Omandi) | Long-term courses | 13,900-52,800/year | 13,900-27,800/year | | | Short-term courses | 5,800-25,800/course | 5,800-28,800/course | [Referral Employment and Entrepreneurship Rate](index=25&type=section&id=Referral%20Employment%20and%20Entrepreneurship%20Rate) For the six months ended June 30, 2024, the average referral employment and entrepreneurship rate for long-term course graduates of New East, Omic, and Xinhua Computer exceeded 90%, while Wantong and Omandi exceeded 95%, demonstrating the company's strong performance in assisting students with employment Referral Employment and Entrepreneurship Rate for Long-term Course Graduates (For the six months ended June 30, 2024) | Brand | Referral Employment Rate | | :--- | :--- | | New East | 94.4% | | Omic | 93.0% | | Xinhua Computer | 92.0% | | Wantong | 96.1% | | Omandi | 95.3% | - Referral employment and entrepreneurship rate refers to the total number of long-term course students employed through the company's employment and entrepreneurship service programs or entrepreneurial services divided by the total number of long-term course graduates during that period[48](index=48&type=chunk) [Financial Review](index=26&type=section&id=Financial%20Review) This section provides a detailed review of financial performance for the six months ended June 30, 2024, including revenue, costs, gross profit, various expenses, adjusted profit metrics, and asset-liability structure, showing revenue and gross profit growth, effective cost control, but a decrease in current ratio and cash and cash equivalents [Revenue](index=26&type=section&id=Revenue) For the six months ended June 30, 2024, the Group's revenue was RMB 1,983 million, a year-on-year increase of 1.6%, attracting more high-value new students by adjusting enrollment strategies and optimizing curriculum structure despite a decrease in new student enrollments - For the six months ended June 30, 2024, revenue increased by approximately **1.6%** from RMB 1,953 million in the prior year to **RMB 1,983 million**[49](index=49&type=chunk) - New student enrollments and new customer registrations decreased by approximately **7.7%**, but the company adjusted its enrollment strategy and optimized its curriculum structure to attract more high-value new students[49](index=49&type=chunk) Revenue and Average Annual Tuition/Service Fees per Student/Customer by Segment (RMB thousand) | Segment and Brand | 2024 Revenue | 2024 Average Annual Tuition/Service Fees per Student/Customer | 2023 Revenue | 2023 Average Annual Tuition/Service Fees per Student/Customer | Revenue Change | Average Tuition/Service Fees Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Culinary Technology | 919,295 | 32.2 | 951,055 | 31.6 | (3.3%) | 2.1% | | Western Pastry and Culinary | 159,280 | 68.7 | 160,605 | 69.9 | (0.8%) | (1.8%) | | Information Technology and Internet Technology | 378,229 | 19.1 | 395,036 | 18.7 | (4.3%) | 2.1% | | Auto Services | 449,163 | 22.4 | 404,375 | 20.8 | 11.1% | 7.4% | | Fashion and Beauty | 40,481 | 23.7 | 16,722 | 24.6 | 142.1% | (3.5%) | | Other Miscellaneous Businesses | 36,876 | Not applicable | 25,230 | Not applicable | 46.2% | Not applicable | | **Total** | **1,983,324** | **26.9** | **1,953,023** | **26.2** | **1.6%** | **2.7%** | [Cost of Revenue](index=27&type=section&id=Cost%20of%20Revenue) For the six months ended June 30, 2024, cost of revenue was RMB 932 million, a year-on-year decrease of 2.5%, mainly due to reductions in teaching-related consumables and other costs, lease expenses and depreciation of right-of-use assets, and campus maintenance and depreciation - Cost of revenue decreased by approximately **2.5%** from approximately RMB 956 million in the prior year to approximately **RMB 932 million**[52](index=52&type=chunk) Details of Cost of Revenue (RMB thousand) | Item | 2024 Cost | 2024 % of Total | 2023 Cost | 2023 % of Total | | :--- | :--- | :--- | :--- | :--- | | Staff salaries and benefits | 377,920 | 40.5% | 362,269 | 37.9% | | Teaching-related consumables and other costs | 168,780 | 18.1% | 191,777 | 20.1% | | Lease expenses and depreciation of right-of-use assets | 144,142 | 15.5% | 157,092 | 16.5% | | Campus maintenance and depreciation | 163,730 | 17.6% | 168,478 | 17.6% | | Utilities | 45,703 | 4.9% | 45,107 | 4.7% | | Office expenses | 31,925 | 3.4% | 30,906 | 3.2% | | **Total** | **932,200** | **100%** | **955,629** | **100%** | [Gross Profit and Gross Margin](index=28&type=section&id=Gross%20Profit%20and%20Gross%20Margin) For the six months ended June 30, 2024, gross profit was RMB 1,051 million and gross margin was 53.0%, both higher than RMB 997 million and 51.1% in the prior year, mainly due to increased revenue and effective cost control - Gross profit increased from **RMB 997 million** in the prior year to **RMB 1,051 million**[54](index=54&type=chunk) - Gross margin improved from **51.1%** in the prior year to **53.0%**, primarily due to increased revenue and decreased cost of revenue[54](index=54&type=chunk) Gross Profit and Gross Margin by Major Segment | Segment and Brand | 2024 Gross Profit/(Loss) (RMB thousand) | 2024 Gross Profit/(Loss) Margin | 2023 Gross Profit/(Loss) (RMB thousand) | 2023 Gross Profit/(Loss) Margin | | :--- | :--- | :--- | :--- | :--- | | Culinary Technology | 508,154 | 55.3% | 501,178 | 52.7% | | Western Pastry and Culinary | 85,699 | 53.8% | 75,443 | 47.0% | | Information Technology and Internet Technology | 204,757 | 54.1% | 216,455 | 54.8% | | Auto Services | 243,109 | 54.1% | 209,413 | 51.8% | | Fashion and Beauty | 21,280 | 52.6% | 6,010 | 35.9% | | Other Miscellaneous Businesses | (11,875) | (32.2%) | (11,105) | (44.0%) | | **Total** | **1,051,124** | **53.0%** | **997,394** | **51.1%** | [Other Income and Expenses](index=29&type=section&id=Other%20Income%20and%20Expenses) For the six months ended June 30, 2024, other income and expenses amounted to approximately RMB 58 million, a decrease from RMB 68 million in the prior year, mainly due to reduced unconditional government grants and interest income from time deposits - Other income and expenses amounted to approximately **RMB 58 million** (prior year: RMB 68 million), primarily due to a decrease in unconditional government grants and interest income from time deposits and bank balances[57](index=57&type=chunk) [Other Gains and Losses](index=29&type=section&id=Other%20Gains%20and%20Losses) For the six months ended June 30, 2024, other gains and losses recorded a net gain of approximately RMB 24 million, a significant decrease from RMB 57 million in the prior year, primarily impacted by a reduction in net exchange gains - Other gains and losses recorded a net gain of approximately **RMB 24 million** (prior year: RMB 57 million)[58](index=58&type=chunk) - This was primarily attributable to a gain from fair value changes of other financial assets at fair value through profit or loss of approximately **RMB 20 million** (prior year: RMB 11 million) and a net exchange gain of approximately **RMB 6 million** (prior year: RMB 44 million)[58](index=58&type=chunk) [Selling Expenses](index=29&type=section&id=Selling%20Expenses) For the six months ended June 30, 2024, selling expenses were RMB 464 million, a decrease from RMB 513 million in the prior year, mainly due to the company's enhanced control over advertising costs - Selling expenses decreased from **RMB 513 million** in the prior year to **RMB 464 million**, mainly due to enhanced control over advertising costs[59](index=59&type=chunk) [Administrative Expenses](index=29&type=section&id=Administrative%20Expenses) For the six months ended June 30, 2024, administrative expenses remained stable at RMB 256 million, with its proportion to revenue slightly decreasing - Administrative expenses remained stable at **RMB 256 million** for the six months ended June 30, 2023, and June 30, 2024[60](index=60&type=chunk) - Administrative expenses accounted for approximately **12.9%** of revenue for the six months ended June 30, 2024, compared to **13.1%** for the six months ended June 30, 2023[60](index=60&type=chunk) [Finance Costs](index=29&type=section&id=Finance%20Costs) For the six months ended June 30, 2024, finance costs were RMB 62 million, primarily interest expense on lease liabilities, a decrease from RMB 72 million in the prior year - Finance costs amounted to **RMB 62 million** (prior year: RMB 72 million), representing interest expense recognized on lease liabilities[61](index=61&type=chunk) [Adjusted Net Profit and Adjusted EBITDA](index=30&type=section&id=Adjusted%20Net%20Profit%20and%20Adjusted%20EBITDA) For the six months ended June 30, 2024, adjusted net profit was RMB 278 million, a year-on-year increase of 57.9%; adjusted EBITDA was RMB 715 million, a year-on-year increase of 13.0%, indicating a significant improvement in the company's profitability Adjusted Net Profit and Adjusted EBITDA (RMB thousand) | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Net profit for the period | 271,513 | 203,835 | | Adjustment: Non-cash share-based payment expenses | 12,550 | 16,496 | | Adjustment: Net exchange gain | (5,741) | (44,071) | | **Adjusted Net Profit** | **278,322** | **176,260** | | Adjustment: Depreciation | 300,182 | 313,595 | | Finance costs | 61,578 | 71,570 | | Income tax | 74,557 | 71,128 | | **Adjusted EBITDA** | **714,639** | **632,553** | - Adjusted net profit excludes the impact of non-cash share-based payment expenses and net exchange gains[63](index=63&type=chunk) [Property and Equipment](index=31&type=section&id=Property%20and%20Equipment) As of June 30, 2024, property and equipment amounted to approximately RMB 3,163 million, a 2.7% increase from December 31, 2023, mainly due to additions to property and equipment for vocational education industrial parks and new schools in Sichuan, Shandong, Guizhou, and Henan - Property and equipment increased by **2.7%** from approximately RMB 3,080 million as of December 31, 2023, to approximately **RMB 3,163 million** as of June 30, 2024[65](index=65&type=chunk) - The increase was mainly due to additions to property and equipment for vocational education industrial parks in Sichuan, Shandong, Guizhou, and Henan, as well as new schools during the period[65](index=65&type=chunk) [Right-of-Use Assets](index=31&type=section&id=Right-of-Use%20Assets) As of June 30, 2024, right-of-use assets remained stable at approximately RMB 2,226 million, as the acquisition of right-of-use assets for vocational education industrial parks in Guizhou and Henan was offset by the closure of loss-making schools and termination of lease agreements - Right-of-use assets remained stable at approximately **RMB 2,226 million** as of June 30, 2024[66](index=66&type=chunk) - The stability was due to the acquisition of right-of-use assets for vocational education industrial parks in Guizhou and Henan being offset by the closure of certain loss-making schools and the termination of related lease agreements[66](index=66&type=chunk) [Capital Structure, Liquidity, Financial Resources, and Gearing Ratio](index=31&type=section&id=Capital%20Structure%2C%20Liquidity%2C%20Financial%20Resources%2C%20and%20Gearing%20Ratio) As of June 30, 2024, the Group's total equity was approximately RMB 5,496 million, with a current ratio of 1.5 times and a gearing ratio of 40.6%. Total time deposits, cash, and cash equivalents amounted to approximately RMB 2,645 million, accounting for 28.6% of total assets - As of June 30, 2024, the Group's total equity was approximately **RMB 5,496 million** (December 31, 2023: RMB 5,608 million)[66](index=66&type=chunk) Liquidity and Gearing Ratio | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current ratio | 1.5 times | 1.7 times | | Gearing ratio | 40.6% | 39.6% | | Total time deposits, cash and cash equivalents | RMB 2,645 million | RMB 3,067 million | | % of total assets | 28.6% | 33.0% | - For the six months ended June 30, 2024, capital expenditures amounted to approximately **RMB 471 million**, primarily related to the acquisition of property and equipment and right-of-use assets[66](index=66&type=chunk) [Other Financial Assets](index=32&type=section&id=Other%20Financial%20Assets) This section details the company's other financial assets held as of June 30, 2024, including unlisted fund investments and structured deposits, and explains its investment strategy and risk management measures aimed at generating higher returns from idle funds Details of Other Financial Assets (As of June 30, 2024) | Category | Name | Fair Value (RMB thousand) | Unrealized Gain (RMB thousand) | % of Total Assets | | :--- | :--- | :--- | :--- | :--- | | Unlisted Fund Investments | E Fund Hong Kong Selected Asia High Yield Fund | 164,059 | 8,575 | 1.8% | | | CICC Multi-Strategy Fixed Income Fund | 205,594 | 8,632 | 2.2% | | **Total Unlisted Fund Investments** | | **369,653** | **17,207** | **4.0%** | | Structured Deposits | China Construction Bank Money Market Fund | 50,061 | 61 | 0.5% | | | Guoxin Securities Fengli Xinan Series | 61,156 | 1,156 | 0.7% | | | Haitong Securities Co., Ltd. Haitong Asset Management Wealth Craftsmanship 100 Series | 61,128 | 1,128 | 0.7% | | | Bank of Hangzhou Structured Deposit | 1,000 | – | 0.0% | | | Huaxia Bank Huaxia Wealth Pure Bond | 50,346 | 346 | 0.5% | | | Industrial and Commercial Bank of China Limited "Quanxin Equity" Weekly Open-ended Wealth Management Product | 11,750 | – | 0.1% | | | Exchange Rate Linked Accumulative Corporate Structured Deposit | 20,000 | – | 0.2% | | **Total Structured Deposits** | | **255,441** | **2,691** | **2.7%** | | Other Financial Assets at Amortized Cost | Entrusted loan to an associate – Xinhua Holdings Group | 50,000 | – | 0.5% | | **Total** | | **675,094** | **19,898** | **7.2%** | - The investment strategy aims to utilize idle funds to obtain returns relatively higher than fixed bank deposits without affecting business operations or capital expenditures[69](index=69&type=chunk) - The company has implemented internal controls and risk management measures, including regular analysis of financial asset performance, requiring issuance by reputable banks or financial institutions, and assessing the financial condition of entrusted loans to associates with personal guarantees from controlling shareholders[69](index=69&type=chunk)[70](index=70&type=chunk) [Material Investments, Acquisitions, and Disposals](index=35&type=section&id=Material%20Investments%2C%20Acquisitions%2C%20and%20Disposals) For the six months ended June 30, 2024, the Group held no major investments, material acquisitions, or disposals of subsidiaries, associates, and joint ventures, other than those disclosed - For the six months ended June 30, 2024, the Group held no major investments, material acquisitions, or disposals of subsidiaries, associates, and joint ventures[71](index=71&type=chunk) [Foreign Exchange Risk Management](index=35&type=section&id=Foreign%20Exchange%20Risk%20Management) The Group's majority of income and expenses are denominated in RMB, but some expenses, time deposits, bank balances, and other payables are denominated in HKD and USD, exposing it to foreign exchange risk. Management monitors foreign exchange risk and will consider hedging when necessary - The majority of the Group's income and expenses are denominated in RMB, but some are denominated in HKD and USD, exposing it to foreign exchange risk[71](index=71&type=chunk) - For the six months ended June 30, 2024, the Group did not use any financial instruments for hedging purposes[71](index=71&type=chunk) - Management monitors foreign exchange risk and will consider hedging significant foreign currency exposures when necessary[71](index=71&type=chunk) [Pledges of the Group's Assets](index=35&type=section&id=Pledges%20of%20the%20Group%27s%20Assets) As of June 30, 2024, and December 31, 2023, the Group pledged lease deposits to secure unpaid contractual lease payments - As of June 30, 2024, and December 31, 2023, the Group pledged lease deposits to secure unpaid contractual lease payments[72](index=72&type=chunk) [Contingent Liabilities](index=35&type=section&id=Contingent%20Liabilities) As of June 30, 2024, and December 31, 2023, the Group had no material contingent liabilities, guarantees, or pending litigation - As of June 30, 2024, and December 31, 2023, the Group had no material contingent liabilities, guarantees, or any material litigation or claims pending or threatened against any member of the Group[72](index=72&type=chunk) [Events After Reporting Period](index=35&type=section&id=Events%20After%20Reporting%20Period) No significant events occurred after the reporting period and up to the date of this announcement - No significant events occurred after the reporting period and up to the date of this announcement[73](index=73&type=chunk) [Outlook](index=35&type=section&id=Outlook) The company is committed to continuously expanding its business, campus network, and strengthening its market position through strategies such as establishing vocational education industrial parks, expanding its campus network, curriculum expansion and diversification, and actively applying to become a third-party assessment institution for vocational skill level certification, to meet market demand and enhance educational quality [Establishment of Vocational Education Industrial Parks](index=36&type=section&id=Establishment%20of%20Vocational%20Education%20Industrial%20Parks) The company strategically acquires land and facilities in key enrollment provinces to establish vocational education industrial parks, equipping them with advanced teaching and practical training facilities to consolidate market leadership, avoid rental pressure, improve campus environments, and increase long-term student stability - The company's strategy is to acquire land and building facilities in major enrollment cities to establish vocational education industrial parks[74](index=74&type=chunk) - Vocational education industrial parks will be equipped with advanced teaching and practical training facilities for the seven major brand schools/centers, consolidating market leadership and brand position[74](index=74&type=chunk) - Phase I projects of vocational education industrial parks in Sichuan, Shandong, and Guizhou have commenced operations, Phase I of the Henan vocational education industrial park is nearing completion, and Phase I projects in Jiangsu and Jiangxi vocational education industrial parks are being planned and advanced[74](index=74&type=chunk) [Expansion of Campus Network](index=36&type=section&id=Expansion%20of%20Campus%20Network) The company plans to further expand its campus network to cover all provincial capital cities in China and establish operations in cities with significant potential but unmet demand for skilled workers in culinary technology, Western pastry and culinary, information technology and internet technology, auto services, and fashion and beauty - The company intends to further expand its campus network to cover all provincial capital cities in China[75](index=75&type=chunk) - Plans include establishing operations in cities with significant potential but unmet demand for skilled workers in culinary technology, Western pastry and culinary, information technology and internet technology, auto services, and fashion and beauty[75](index=75&type=chunk) [Curriculum Expansion and Diversification](index=36&type=section&id=Curriculum%20Expansion%20and%20Diversification) The company plans to expand the diversity of courses in its five existing industry sectors and explore potential new industry areas, such as vocational skills education for service industries and new economies like artificial intelligence and healthcare, to seize market development opportunities - The company plans to continue expanding its business and diversifying its curriculum to respond to industry trends and market demand[76](index=76&type=chunk) - It will continue to develop other markets for vocational skills education in service industries and new economies such as artificial intelligence and healthcare[76](index=76&type=chunk) [Actively Applying to Become a Third-Party Assessment Institution for Vocational Skill Level Certification](index=37&type=section&id=Actively%20Applying%20to%20Become%20a%20Third-Party%20Assessment%20Institution%20for%20Vocational%20Skill%20Level%20Certification) The Group has become one of China's first third-party assessment institutions for vocational skill level certification, which will significantly enhance its reputation, strengthen brand influence, enrich culinary segment courses, integrate employment resources, and improve educational quality - The Group became one of China's first third-party assessment institutions for vocational skill level certification in 2020[77](index=77&type=chunk) - This means the Group can conduct vocational skill level assessments and issue nationally recognized certificates to the public according to standards and regulations, which will significantly enhance the Group's reputation and strengthen its brand influence[77](index=77&type=chunk) - The Group can provide corresponding examination training for social personnel seeking vocational skill level certificates, thereby further enriching the culinary segment's curriculum and acquiring potential customers[77](index=77&type=chunk) [Other Information](index=38&type=section&id=Other%20Information) This section covers the company's employees and remuneration policy, dividend distribution, trading of listed securities, corporate governance practices, standard code for securities transactions, and the audit committee's review of financial statements, demonstrating the company's practices in human resource management, shareholder returns, and corporate governance [Employees and Remuneration Policy](index=38&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2024, the company had 10,564 employees, with remuneration determined based on individual qualifications, experience, performance, and market levels. The company provides social security programs for employees in China and MPF schemes for employees in Hong Kong - As of June 30, 2024, the company had **10,564 employees**, with **10,550** in mainland China and **14** in Hong Kong[78](index=78&type=chunk) Number of Employees by Function (As of June 30, 2024) | Function | Number of Full-time Employees | % of Total | | :--- | :--- | :--- | | Executive Directors and Core Management | 312 | 3.0% | | Full-time Teachers and Instructors | 5,456 | 51.6% | | Student Accommodation Staff | 53 | 0.5% | | Logistics Staff | 386 | 3.7% | | Administrative Staff | 1,779 | 16.8% | | Accounting and Finance Staff | 356 | 3.4% | | Others | 2,222 | 21.0% | | **Total** | **10,564** | **100%** | - Remuneration is determined based on individual qualifications, experience, performance, contribution to the Group, and prevailing market remuneration levels, providing employees with basic salaries and performance bonuses[79](index=79&type=chunk) [Dividends](index=39&type=section&id=Dividends) The Board did not recommend an interim dividend for the six months ended June 30, 2024, at its meeting on August 21, 2024. The company paid a final dividend of HKD 0.2 per share for the year ended December 31, 2023, in June 2024 - The Board did not recommend the distribution of an interim dividend for the six months ended June 30, 2024 (prior year: nil)[80](index=80&type=chunk) - The company paid a final dividend of **HKD 0.2** per ordinary share (approximately RMB 0.18) for the year ended December 31, 2023, on June 27, 2024[80](index=80&type=chunk) [Purchase, Sale, and Redemption of the Company's Listed Securities](index=39&type=section&id=Purchase%2C%20Sale%2C%20and%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and the company held no treasury shares - For the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[81](index=81&type=chunk) - As of June 30, 2024, the company held no treasury shares[81](index=81&type=chunk) [Corporate Governance Practices](index=39&type=section&id=Corporate%20Governance%20Practices) The company has adopted and complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules, committed to enhancing corporate governance practices to safeguard shareholders' interests - The company has adopted the principles of the Corporate Governance Code set out in Appendix C1 of the Listing Rules[82](index=82&type=chunk) - For the six months ended June 30, 2024, the company has complied with all code provisions of the Corporate Governance Code[82](index=82&type=chunk) [Standard Code for Securities Transactions](index=39&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company has adopted the Standard Code as set out in Appendix C3 of the Listing Rules as the code of conduct for directors and relevant employees dealing in securities, and confirmed that all directors complied with the code during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[83](index=83&type=chunk) - Following specific enquiries with all directors, it is confirmed that they have complied with the required standards set out in the Model Code for the six months ended June 30, 2024[83](index=83&type=chunk) [Audit Committee and Review of Condensed Consolidated Financial Statements](index=40&type=section&id=Audit%20Committee%20and%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2024, and deemed them to be in compliance with applicable accounting standards, Listing Rules, and statutory requirements - The Audit Committee, comprising three independent non-executive directors, is primarily responsible for assisting the Board in conducting an independent review of the integrity, accuracy, and fairness of the financial statements[84](index=84&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the six months ended June 30, 2024, and considers them to be prepared in accordance with applicable accounting standards, the Listing Rules, and statutory requirements[84](index=84&type=chunk) - The company's auditor, Deloitte Touche Tohmatsu, has reviewed the Group's unaudited interim results in accordance with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[84](index=84&type=chunk) [Publication of Interim Results Announcement and Interim Report](index=40&type=section&id=Publication%20of%20Interim%20Results%20Announcement%20and%20Interim%20Report) This interim results announcement has been published on the HKEX website and the company's website, and the interim report will be published and dispatched to shareholders who have opted for a printed version in due course - This interim results announcement has been published on the HKEX website (www.hkexnews.hk) and the company's website (www.chinaeastedu.com)[85](index=85&type=chunk) - The company's interim report for the six months ended June 30, 2024, will be published on the aforementioned websites in due course and dispatched to shareholders who have indicated their preference to receive a printed version[85](index=85&type=chunk)

端午节前我们也是参加了中国中方教育的普通大会然后在过节期间发布了关于公司的第二天深度报告那短期我们是判断公司在成本控制方面出现成效包括营销费用、资金还有人力这三大固定成本之间都会有一些改善 所以我们判断公司的中暴是有望超越期的这是短期中期我们也认为疫情还有政策对于公司的影响都在减弱比如说烹饪通过关闭亏损的学校电脑通过去做升学专业汽车保持快速的发展欧米奇还有美叶欧米奇是有望减亏美叶是有望跑通成为一个新的增长点然后长期公司也是有望通过区域中心拉长学质然后应对公办在升学方面的一个竞争 那从公司的安全经济来看我们看到目前公司的市值也就是40多亿但账上金钱金还有30亿那补息率有10%所以我们是非常推荐大家底部来关注这样一个投资的机会今天我们也非常荣幸邀请到公司的投资部长华总还有财务部的丁部长和大家做一个交流那首先把时间交给华总就工作情况来做一个介绍谢谢华总好的 首先谢谢双双也谢谢各位投资人今天上午能够来到这个会议上 刚才双双已经讲得很清楚就是其实我们的业务的拐点其实在今年的上半年已经非常明确了特别是财务方面的一些数据那么我再更加清晰一点的把一些财务的一些方面跟大家再做一个相对来说比较详细一点的解析那么今年上半年我们的半 ...

证券研究报告|港股公司动态研究报告 [Table2_0D2a4te年] 06月 08日 [推Table荐_Title]中 国东方教育底部机会 [中Tab国le_T东itle2方] 教育（0667.HK) 评级及分析师信息 [Ta bl此e_前Su业mm绩ar承y]压 原因 [评Ta级bl：e_ Rank] 买入 上次评级： 买入 我们分析，公司自2019年上市后业绩承压主要受到以下几个 目标价格（港元）： 方面的影响：（1）疫情影响长期生招生，而疫后虽然招生恢 最新收盘价（港元）： 2.23 复，但长期生仍需消化2年以上招生缺口；（2）2021年职普 比严格执行下的公办竞争影响，主要体现在新东方烹饪的头部 [股Ta票bl代e_码Ba：se data] 0667 校区；（3）销售费用刚性，这主要受到公司在19-22年学校 52 周最高价/最低价（港 数快速扩张、互联网渠道分散、公司新增综合专业推广及新增 3.85/2.11 元）： 渠道招生影响；（4）19年上市后高举高打，做地县级下沉扩 总市值（亿港元） 48.59 校，形成亏损，23年关闭亏损学校造成一定亏损影响。 自由流通市值（亿港元） 48.59  ...

Educational Operations - As of December 31, 2023, China East Education operated 245 schools and centers with an average enrollment of 146,839 students[5]. - The culinary arts segment, under the New East brand, had 76 schools with an average of 58,529 students enrolled[10]. - The information technology segment, represented by Xinhua Internet, operated 39 schools with an average enrollment of 41,061 students[10]. - The auto services segment, under Wontone, had 41 schools with an average of 39,175 students enrolled[10]. - The fashion and beauty segment, represented by On-mind, operated 5 schools with an average enrollment of 1,955 students[10]. - The total average number of students enrolled across all segments for the year ended December 31, 2023, was 146,839[10]. - The company focuses on providing innovative vocational training in four key sectors: culinary arts, information technology, auto services, and fashion & beauty[5]. - The comprehensive nationwide school network covers almost all provinces in mainland China and Hong Kong[5]. - The number of schools in operation reached 245 as of December 31, 2023, including 76 schools under New East Culinary Education and 41 schools under Wontone Automotive Education[11]. - The company expanded its business to Hong Kong, increasing the number of operational schools from 71 to 126 over a specified period[11]. - The company founded Omick Education of Western Cuisine and Pastry to offer high-quality western-style catering education, diversifying its educational offerings[11]. - The company has established seven renowned school brands, including New East Culinary Education and Omick Education, to cater to diverse vocational training needs[32]. Financial Performance - For the year ended 31 December 2023, the Group's revenue was RMB 3,979 million, representing a year-on-year increase of 4.2% compared to 2022[18]. - The net profit for the year was approximately RMB 273 million, representing a year-on-year decrease of 25.8% compared to 2022[18]. - The adjusted net profit for the year was RMB 281 million, representing a year-on-year increase of 5.4% compared to 2022[18]. - Gross profit for the year was RMB 1,908 million, slightly up from RMB 1,891 million in 2022[18]. - Adjusted EBITDA for the year was RMB 1,136 million, down from RMB 1,189 million in 2022[18]. - Total assets as of 31 December 2023 were RMB 9,291 million, compared to RMB 9,489 million as of 31 December 2022[18]. - The cost of revenue rose from approximately RMB 1,928 million in 2022 to approximately RMB 2,070 million in 2023, marking an increase of 7.4%[60]. - Selling expenses increased from RMB 946 million for the year ended 31 December 2022 to RMB 1,037 million for the year ended 31 December 2023, reflecting a growth of approximately 9.6%[68]. - Administrative expenses rose from RMB 512 million in 2022 to RMB 529 million in 2023, representing about 13.3% of revenue for 2023, stable compared to 13.4% in 2022[68]. Student Enrollment and Growth - The number of new students enrolled was 152,881, representing a year-on-year increase of 13.8% compared to 2022[18]. - The average number of students enrolled nationwide in 2023 was 146,839[18]. - The Group opened 5 new schools, bringing the total number of institutions nationwide to 245[18]. - The total number of new students enrolled across all segments increased by 13.8% to 152,881 in 2023 from 134,347 in 2022[41]. - Long-term enrollment in the Fashion and Beauty segment surged by 392.3% to 1,728 in 2023 from 351 in 2022[41]. - Short-term course enrollment in the Auto Services segment increased by 31.9% to 17,923 in 2023 from 13,593 in 2022[41]. Corporate Governance - The Company has complied with all code provisions set out in the Corporate Governance Code for the year ended December 31, 2023[112]. - The Board is collectively responsible for promoting the success of the Company and directing its affairs[114]. - The Company is committed to enhancing its corporate governance practices and will review them periodically to align with statutory and professional standards[113]. - The Company has adopted a written human resources policy to govern recruitment and diversity of the workforce[157]. - The Company has provided appropriate insurance cover for Directors and officers' liabilities to protect against potential legal actions[131]. Future Plans and Strategic Initiatives - The Group plans to establish Vocational Education Industrial Parks in major student recruitment provinces, with the first phase in Sichuan and Shandong already operational, and projects in Guizhou and Henan nearing completion[87]. - The Group aims to expand its school network to cover all provincial capital cities in China, targeting cities with significant unmet demand for skilled workers in various sectors[88]. - The Group intends to diversify its course offerings in culinary arts, information technology, auto services, and fashion & beauty, while exploring new sectors like artificial intelligence and healthcare[89]. - The Group believes that the Vocational Education Industrial Parks will drive increased student demand for its education services and achieve cost synergies in the future[86]. Employee and Management Structure - As of December 31, 2023, the total number of employees is 10,881, with 48.0% being full-time teachers and instructors[97]. - The company plans to hire additional teachers and instructors as part of its expansion strategy[98]. - The remuneration packages are determined based on individual qualifications, experience, performance, and market rates[100]. - The executive directors and core management account for 3.1% of the total employee count[97]. - The company emphasizes performance-based bonuses in its employee compensation structure[100]. Risk Management and Financial Assets - The Group has sufficient capital to meet its commitments and working capital requirements for future operations and general business expansion[75]. - Internal control and risk management measures are in place to monitor the performance and redemption status of financial assets, which are generally low-risk and issued by reputable institutions[79]. - The Group did not use financial instruments for hedging purposes in 2023 but monitors foreign exchange exposure and may consider hedging when necessary[85]. Environmental, Social, and Governance (ESG) Reporting - The Group's Environmental, Social, and Governance (ESG) report covers the period from January 1, 2023, to December 31, 2023, adhering to the Stock Exchange's reporting guidelines[191]. - The report includes data from seven major industrial brands under the Group, maintaining consistency with the prior year[198]. - The Group emphasizes the importance of transparency in its reporting, avoiding any biases that could mislead stakeholders[197].

Investment Rating - The investment rating for China Oriental Education is "Buy" with a target price of 2.29 HKD, maintained as of April 6, 2024 [1]. Core Viewpoints - The report highlights a gradual recovery in training demand, with a focus on vocational skills education that addresses unmet needs in the market, thereby narrowing the supply-demand gap between employers and students [3]. - The company reported a revenue of 3.979 billion RMB for 2023, reflecting a year-on-year increase of 4.2%, while net profit decreased by 25.8% to 273 million RMB [1][3]. - The average training participants for the year reached 147,000, an increase of 2.9% year-on-year, indicating a positive trend in customer engagement [1][3]. Summary by Sections Financial Performance - In 2023, the company achieved a revenue of 3.979 billion RMB, with a net profit of 273 million RMB, and an adjusted net profit of 281 million RMB, which is a 5.4% increase year-on-year [1]. - The gross profit margin for 2023 was 48.0%, a decrease of 1.5 percentage points compared to the previous year, primarily due to increased costs in employee salaries and benefits [2][3]. Brand Performance - Revenue breakdown by brand shows New Oriental at 1.865 billion RMB (46.9% of total revenue, down 2.7 percentage points), Oumaiqi at 330 million RMB (8.3%, up 0.6 percentage points), and Wan Tong at 847 million RMB (21.3%, up 2.5 percentage points) [1]. - The number of new training participants and registered customers for 2023 was 153,000, a year-on-year increase of 13.8% [1]. Future Projections - The report adjusts the revenue and net profit forecasts for FY24-26, estimating revenues of 4.4 billion RMB, 4.9 billion RMB, and 5.5 billion RMB respectively, with net profits of 340 million RMB, 400 million RMB, and 470 million RMB [3]. - The expected earnings per share (EPS) for FY24-26 are projected at 0.15, 0.18, and 0.22 RMB, with corresponding price-to-earnings (PE) ratios of 14, 12, and 10 [3].

Investment Rating - The report maintains a "Buy" rating for China Oriental Education (0667) [5][3]. Core Views - The 2023 annual performance was below expectations, with employee compensation and marketing expenses front-loaded, leading to temporary pressure on profit margins. However, new student enrollments are gradually recovering, and revenue-driven profit recovery is anticipated [3][4]. - The expected EPS for 2024-2026 is projected at 0.18, 0.22, and 0.24 CNY, respectively, with a target price of 2.70 CNY/2.93 HKD based on a 15x PE valuation for 2024 [3][4]. Financial Summary - In 2023, the company achieved revenue of 39.79 billion CNY, a year-on-year increase of 4.2%, and an adjusted net profit of 2.81 billion CNY, up 5.4% year-on-year. However, performance was below expectations due to a decline in new enrollments during the pandemic [3][4]. - The gross profit margin decreased by 1.56 percentage points to 47.96%, primarily due to significant increases in employee salaries and benefits. The company anticipates that as new enrollments stabilize, the student-to-teacher ratio will improve, potentially enhancing the gross margin [3][4]. - The company’s operating expense ratio for 2023 was 43.3%, an increase of 0.46 percentage points, with sales, management, R&D, and financial expense ratios showing various year-on-year changes [3][4]. Enrollment and Training Growth - In 2023, the company added 152,900 training participants, a year-on-year increase of 13.8%, with an average of 146,800 training participants, up 2.9% year-on-year. The revenue from various training segments showed mixed results, with notable growth in automotive repair and culinary training [3][4].

申万宏源研究 上海市南京东路99号 | +86 21 2329 7818 www.swsresearch.com 简单金融 成就梦想 教育 | 公司研究 成本压力亟待解决，招生恢复初现端倪 2024年3月28日 中国东方教育 (00667:HK) 增持 中国东方教育公布2023年业绩，收入为人民币39.8亿元，同比上升4.2%，经调整净利润为人民 币2.8亿元，同比上升5.4%。公司的收入，利润增长低于我们预期。 下调 招生压力仍在，培训人次增速放缓。23年全年公司新培训人数达到15.18万人，同比增长13%， 增幅较上半年20%回落。平均培训人次为14.68万人，同比微增2.9%。并较上半年14.7万人次 下降0.3%。在经济缓慢复苏的背景下，公司培训人增长乏力。 市场数据：2024年3月27日 收盘价（港币） 2.41 毛利收缩源自租金成本上涨。公司 23 年毛利润为 19.08 亿元，同比增长 0.9%，增速弱于收入增 恒生中国企业指数 5728 长。毛利率为48%，同比收窄1.5个百分点。我们认为在公司投建自有区域中心后仍维持部分租赁 52周最高/最低价 (港币) 4.51/2.11 校区的运营，导致 ...

Financial Performance - Revenue for the year ended December 31, 2023, reached RMB 3,979 million, a 4.2% increase from RMB 3,819 million in 2022[2] - Net profit decreased by 25.8% to RMB 273 million from RMB 368 million in 2022[2] - Adjusted net profit rose by 5.4% to RMB 281 million from RMB 267 million in 2022[2] - The company reported a basic earnings per share of RMB 12.51, down from RMB 16.89 in 2022[5] - The diluted earnings per share for the same period was RMB 12.37, down from RMB 16.73 in the previous year, representing a decrease of approximately 26.0%[17] - The operating profit for the year was RMB 368,009,000, with a net profit of RMB 272,622,000 after tax expenses of RMB 95,387,000[24] - Gross profit for the year ended December 31, 2023, was RMB 1,908 million, compared to RMB 1,891 million in 2022, with a gross margin of 48.0%, down from 49.5% in 2022[70] - Adjusted EBITDA for the year was RMB 1,136 million, a decrease of 4.4% from RMB 1,189 million in 2022[2] Assets and Liabilities - Total assets decreased by 2.1% to RMB 9,291 million from RMB 9,489 million in 2022[2] - The company's net asset value as of December 31, 2023, is RMB 5,607,563 thousand, down from RMB 5,692,058 thousand in 2022, indicating a decline of about 1.5%[8] - The company's total liabilities as of December 31, 2023, were RMB 681,433,000, slightly down from RMB 683,580,000 in 2022[44] - Cash and cash equivalents amounted to RMB 1,515 million, compared to RMB 1,435 million in 2022[6] - The current ratio as of December 31, 2023, was 1.7 times, down from 1.9 times as of December 31, 2022, while the debt-to-asset ratio was 39.6%, slightly improved from 40.0% in the previous year[80] Training and Enrollment - New training participants and new customer registrations increased to 152,881, representing a growth of 13.8% compared to 134,347 in 2022[2] - New training participants for the cooking technology segment increased to 82,914 in 2023, up 14.9% from 72,150 in 2022[53] - The long-term courses in automotive services saw a rise in new training participants to 36,819, reflecting an 18.5% increase from 31,083 in the previous year[54] - The fashion beauty education segment reported a significant growth of 125.7% in new training participants, reaching 3,406 compared to 1,509 in 2022[55] - New customer registrations for the culinary experience courses at 美味學院 totaled 10,086, up 9.8% from 9,189 in 2022[53] Government Grants and Tax Liabilities - The total government grants recognized decreased to RMB 3,924 thousand from RMB 6,006 thousand in the previous year, a decline of approximately 34.5%[8] - The company’s deferred tax liabilities as of December 31, 2023, were RMB 20,527 thousand, down from RMB 22,860 thousand in 2022, indicating a decrease of about 10.2%[8] - Deferred tax liabilities related to lease transactions impacted the financial statements, with an adjustment of RMB 0.13 per share for basic earnings in 2023[17] Operational Highlights - The company operates 245 vocational education institutions across China as of December 31, 2023, maintaining a leading position in vocational skills education[50] - The company plans to continue expanding its vocational education services across various segments, including cooking and IT training[23] - The company aims to bridge the supply-demand gap in vocational skills education, particularly in cooking, IT, and automotive services, addressing unmet demand in these sectors[50] - The company became one of the first third-party evaluation agencies for vocational skill level certification in China, enhancing its reputation and brand influence in vocational training[90] Corporate Governance and Future Plans - The company has adhered to all corporate governance codes and standards as of December 31, 2023, to maintain good governance practices[95] - The company plans to expand its campus network to cover all provincial capitals in China, focusing on cities with unmet demand in culinary technology, IT, automotive services, and fashion beauty industries[88] - The company aims to diversify its course offerings in four key sectors: culinary technology, IT, automotive services, and fashion beauty, in response to industry trends and market demand[89] - The annual general meeting is scheduled for June 7, 2024, with notifications to be sent to shareholders in due course[99]

Educational Operations - As of June 30, 2023, China East Education operated 244 schools and centers with an average enrollment of 147,276 students[18]. - The culinary arts segment, under the New East brand, had 76 schools with 59,128 average students enrolled[18]. - The information technology and internet technology segment, represented by Xinhua Internet, operated 38 schools with 41,702 average students enrolled[18]. - The auto services segment, under the Wontone brand, had 40 schools with 38,827 average students enrolled[18]. - The fashion and beauty segment, represented by On-mind, operated 4 schools with 1,396 average students enrolled[18]. - The company focuses on vocational training in four sectors: culinary arts, information technology, auto services, and fashion and beauty[4]. - The comprehensive nationwide school network covers almost all provinces in mainland China and Hong Kong[4]. - The number of schools in operation reached 244 as of June 30, 2023, including 76 schools under New East Culinary Education and 40 schools under Wontone Automotive Education[19]. - The company established Anhui Xinhua Education to consolidate all schools under a single entity, increasing operational efficiency[19]. - The company expanded its business to Hong Kong, further enhancing its market presence[19]. Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 1,953 million, representing an increase from RMB 1,879 million in the same period of 2022, a growth of approximately 3.9%[20]. - Gross profit for the period was RMB 997 million, slightly up from RMB 993 million year-on-year[20]. - Net profit for the period decreased to RMB 204 million from RMB 242 million in the previous year, a decline of about 15.7%[20]. - Adjusted net profit was RMB 176 million, compared to RMB 181 million in the same period of 2022, reflecting a decrease of approximately 2.8%[20]. - Adjusted EBITDA for the period was RMB 633 million, down from RMB 674 million year-on-year, a decline of about 6.1%[20]. - Total assets as of June 30, 2023, were RMB 9,281 million, a decrease from RMB 9,489 million as of December 31, 2022[20]. - Net assets as of June 30, 2023, were RMB 5,522 million, down from RMB 5,692 million at the end of 2022[20]. Enrollment and Student Statistics - The average number of customers registered for the six months ended June 30, 2023, was 147,276[16]. - The company reported a total of 33,463 new student enrollments in culinary arts for the six months ended June 30, 2023, representing a 26.1% increase compared to 26,532 enrollments in the same period of 2022[29]. - New East Culinary Education had 14,324 long-term course enrollments, up 13.3% from 12,637 in the previous year[29]. - The short-term course enrollments in culinary arts increased by 37.7%, reaching 19,139 compared to 13,895 in the same period of 2022[29]. - The automotive services segment saw a subtotal increase of 21.7% in enrollment to 20,457 in 2023 from 16,812 in 2022[31]. - Long-term enrollment in the fashion & beauty segment surged by 322.6% to 1,526 in 2023 from 863 in 2022[31]. Cost and Expenses - The cost of revenue increased from approximately RMB 885 million for the six months ended June 30, 2022, to approximately RMB 956 million for the six months ended June 30, 2023, representing an increase of approximately 7.9%[50]. - Teaching staff salaries and benefits accounted for 37.9% of the total cost of revenue in 2023, up from 35.6% in 2022[53]. - Selling expenses increased from RMB 443 million for the six months ended June 30, 2022, to RMB 513 million for the same period in 2023, reflecting a focus on brand promotion and student recruitment[58]. - Administrative expenses rose from RMB 246 million for the six months ended June 30, 2022, to RMB 256 million for the same period in 2023, maintaining a stable ratio of 13.1% of revenue[58]. Strategic Initiatives - The company aims to enhance employability through innovative vocational training education[4]. - The company is focusing on enhancing its vocational education offerings and expanding its market presence in China[20]. - Future outlook includes potential new product launches and technology developments aimed at improving educational services[20]. - The company is exploring strategic partnerships and acquisitions to bolster its growth trajectory in the education sector[20]. - The Group intends to expand and diversify course offerings in culinary arts, information technology, auto services, and fashion & beauty, responding to industry trends and market demand[68]. Corporate Governance and Compliance - The company has adopted the standard code for securities transactions by directors as per the listing rules[81]. - The interests and short positions of directors are disclosed in compliance with the Securities and Futures Ordinance[82]. - The Group has confirmed compliance with the Model Code for securities transactions by Directors during the six months ended 30 June 2023[111]. - The Audit Committee reviewed the unaudited condensed consolidated financial statements for the six months ended 30 June 2023, ensuring compliance with applicable accounting standards and adequate disclosures[113]. Market and Economic Context - The company supports China's evolving workforce requirements driven by sustained economic growth and urbanization[4]. - The Group's initiatives are in line with national goals to cultivate diverse talents and promote employment and entrepreneurship through vocational education[104]. - The Group's strategic alignment with government policies is expected to enhance its competitive position in the vocational education sector[106].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 1,953 million, a 4.0% increase from RMB 1,879 million in the previous year[2]. - Net profit decreased by 15.9% to RMB 204 million from RMB 242 million year-on-year[2]. - Adjusted net profit was RMB 176 million, down 2.7% from RMB 181 million in the same period last year[2]. - The company reported a basic earnings per share of RMB 9.36, down from RMB 11.14 in the previous year[5]. - The diluted earnings per share for the same period was reported at 9.19 RMB, adjusted from 9.11 RMB, reflecting similar deferred tax adjustments[19]. - The company reported a pre-tax profit of RMB 274,963 thousand for the six months ended June 30, 2023, compared to RMB 325,950 thousand for the same period in 2022, indicating a decrease of approximately 15.6%[26][28]. - The net profit for the period was RMB 203,835 thousand, down from RMB 242,274 thousand in the previous year, reflecting a decline of about 15.8%[26][28]. - The company reported a significant increase in other income and expenses, amounting to approximately RMB 68 million for the six months ended June 30, 2023, compared to RMB 52 million for the same period in 2022[69]. - Other income and losses recorded a net income of approximately RMB 57 million for the six months ended June 30, 2023, compared to RMB 62 million for the same period in 2022, primarily due to a foreign exchange gain of approximately RMB 44 million[70]. Enrollment and Training Participants - New training participants and new customer registrations increased to 84,552, representing a growth of 20.0% compared to 70,445 in the same period last year[2]. - The total number of new training participants for culinary skills increased by 23.1% to 47,734 in the six months ending June 30, 2023, compared to 38,774 in the same period of 2022[50]. - The number of long-term culinary course participants rose by 26.1% to 33,463, up from 26,532 year-on-year[50]. - New registrations for short-term culinary courses increased by 37.7% to 19,139, compared to 13,895 in the previous year[50]. - The company reported a 59.7% increase in short-term IT course participants, reaching 2,583, up from 1,617 in the same period last year[50]. - The long-term courses in the automotive service segment saw a 21.7% increase in new training participants, totaling 20,457 compared to 16,812 in the previous year[51]. - The fashion beauty segment, specifically Omandi, experienced a significant growth of 76.8% in new training participants, reaching 1,526 from 863[51]. - The average training participants in the automotive service segment increased by 20.2% to 38,827, up from 32,315 in the previous year[54]. Financial Position and Assets - Total assets decreased by 2.2% to RMB 9,281 million from RMB 9,489 million at the end of 2022[2]. - Cash and cash equivalents decreased to RMB 1,185 million from RMB 1,435 million, reflecting a decline of 17.4%[6]. - The company's total equity decreased to RMB 5,522 million, down 3.0% from RMB 5,692 million at the end of 2022[8]. - Trade receivables as of June 30, 2023, were RMB 61,876,000, an increase of 32.7% from RMB 46,625,000 as of December 31, 2022[38]. - The company reported a total of RMB 382,379,000 in other receivables as of June 30, 2023, compared to RMB 284,470,000 as of December 31, 2022, indicating a significant increase of 34.4%[38]. - Property and equipment increased by 9.1% from approximately RMB 2,615 million as of December 31, 2022, to approximately RMB 2,854 million as of June 30, 2023[77]. - Right-of-use assets decreased by 2.4% from approximately RMB 2,425 million as of December 31, 2022, to approximately RMB 2,367 million as of June 30, 2023[78]. - The company held other financial assets amounting to approximately RMB 585 million as of June 30, 2023[79]. Expenses and Costs - The total administrative expenses for the period were RMB 52,541 thousand, a decrease from RMB 47,721 thousand in the previous year[26][28]. - Interest expenses related to lease liabilities were RMB 71,570 thousand for the six months ended June 30, 2023, down from RMB 82,406 thousand in the same period of 2022[33]. - The income tax expense for the period was RMB 71,128 thousand, compared to RMB 83,676 thousand in the previous year, indicating a reduction of approximately 15.1%[34]. - Total employee costs for the first half of 2023 amounted to RMB 716,922,000, representing an increase of 8.7% from RMB 659,218,000 in the first half of 2022[35]. - The total depreciation expense for the first half of 2023 was RMB 318,341,000, a decrease of 3.2% from RMB 329,160,000 in the same period of 2022[35]. - Sales expenses increased from RMB 443 million for the six months ended June 30, 2022, to RMB 513 million for the same period in 2023, attributed to enhanced advertising resources for brand promotion[71]. - Administrative expenses rose from RMB 246 million for the six months ended June 30, 2022, to RMB 256 million for the same period in 2023, maintaining a stable ratio of 13.1% of revenue[72]. - Financial costs decreased to RMB 72 million for the six months ended June 30, 2023, from RMB 82 million for the same period in 2022[73]. Dividends and Shareholder Information - The company declared a final dividend of HKD 0.2 per share for the year ended December 31, 2022, totaling approximately HKD 428,300,000 (approximately RMB 394,892,000)[36]. - The company has not declared an interim dividend for the six months ended June 30, 2023, compared to no interim dividend declared for the same period in 2022[36]. - The company’s final dividend of HKD 0.2 per share for the year ending December 31, 2022, was approved by shareholders on May 25, 2023[94]. Strategic Initiatives and Future Plans - The company aims to bridge the gap between employers and students in vocational education, addressing the unmet demand in various sectors[47]. - The company plans to continue expanding its market presence and enhancing its service offerings to drive future growth[61]. - The group plans to establish regional centers across China to enhance teaching and training facilities for its seven school/center brands, with the first phase in Chengdu and Jinan already operational[86][87]. - The group aims to diversify its course offerings in response to industry trends, focusing on sectors such as artificial intelligence and healthcare[88]. - The company has a scalable business model and standardized management methods to accelerate the launch of new courses[90]. Governance and Compliance - The company’s audit committee, consisting of three independent non-executive directors, reviewed the unaudited interim financial statements for the six months ending June 30, 2023[97]. - The company has adopted the Corporate Governance Code and has complied with all its provisions during the reporting period[95].