Investment Rating - The report maintains a "Buy" rating for the company, with a target price yet to be specified [4]. Core Views - The company achieved a revenue of 4.1 billion RMB in 2024, representing a year-on-year increase of 4%, and a net profit of 500 million RMB, up 87% year-on-year [1]. - The company is optimistic about a profit improvement cycle, driven by strategic investments in vocational education parks in key provinces [4][8]. - The company plans to expand its campus network, particularly in culinary and fashion education sectors, which are expected to have significant growth potential [8]. Financial Performance - The gross profit margin for 2024 was 51.4%, an increase of 3.4 percentage points year-on-year, attributed to revenue growth and improved cost control [3]. - The company reported a total asset value of 9.5 billion RMB, with a net asset value of 5.7 billion RMB, reflecting a year-on-year increase of 2% and 3% respectively [1]. - The company’s total number of schools and centers decreased to 233, a reduction of 12 from the previous year [1]. Business Segmentation - Revenue from New Oriental and Meiwai Academy remained stable at 1.9 billion RMB, while Oumandi saw a significant increase of 125% to 100 million RMB [1]. - The average training participants for 2024 were 140,000, a decrease of 6% year-on-year, with notable declines in several brands [2]. - The company’s strategic focus includes enhancing student demand through the establishment of vocational education parks, which are expected to drive future growth [4][8].

Investment Rating - The report maintains a "Buy" rating for China Oriental Education [2][8] Core Views - The company reported a revenue of RMB 4.12 billion for 2024, a year-on-year increase of 3.5%, and an adjusted net profit of RMB 525 million, up 86.6% year-on-year, driven by effective cost and expense control [5][6] - The company announced a year-end dividend of HKD 0.22 per share, corresponding to a payout ratio of 85%, with a dividend yield of approximately 5% [5] - The report anticipates continued growth in training numbers through the introduction of short-term courses and expansion in the beauty industry training sector [7][8] Financial Performance - Revenue for 2024 is projected at RMB 4.12 billion, with a year-on-year growth rate of 3.46% [9] - Adjusted net profit for 2024 is expected to be RMB 525 million, reflecting a significant year-on-year increase of 86.59% [9] - The company’s gross profit for 2024 is RMB 2.115 billion, with a gross margin of 51.4%, an increase of 3.4 percentage points year-on-year [6][11] Operational Efficiency - The company has effectively controlled costs, resulting in a net profit margin of 12.5%, an increase of 5.6 percentage points year-on-year [6] - Marketing expenses decreased by 6.1% year-on-year to RMB 970 million, with a sales expense ratio of 23.7%, down 2.4 percentage points [6] - The utilization rate of campuses improved from 72.2% in 2023 to 73.1% in 2024, contributing to economies of scale [6] Market Expansion - The company launched short-term courses targeting high school graduates, resulting in a 66.2% year-on-year increase in training numbers for these programs in the second half of 2024 [7] - The beauty industry training sector saw a 70.9% year-on-year increase in average training numbers, indicating strong demand recovery [7] - Five out of seven regional centers have been completed, enhancing the company's ability to offer higher-level vocational training [8] Profit Forecast - The adjusted net profit forecasts for 2025, 2026, and 2027 are RMB 617 million, RMB 732 million, and RMB 860 million respectively, with corresponding P/E ratios of 13.9, 11.7, and 10.0 [9][11]

Group 1 - The education sector is experiencing a rise in stock prices, with notable increases in companies such as China Oriental Education, which rose by 11.52% to HKD 4.84, and Neusoft Ruixin Group, which increased by 5.23% to HKD 3.22 [1] - China Oriental Education reported its 2024 annual performance, with revenue of CNY 4.116 billion, a year-on-year increase of 3.5%, and a net profit of CNY 513 million, up 88% [1] - Huaxin Securities believes that the education industry is currently in a phase of rigid demand, supply clearance, and reduced policy risks, presenting a good opportunity for leading companies with successful business transformations [1] Group 2 - CITIC Securities notes that since the second half of 2024, concerns about industry demand and competition have increased, leading to stock price fluctuations for many companies [2] - Despite the slowdown in growth for some companies, the majority of the education sector's companies are expected to maintain revenue growth of over 20%, with valuations having dropped to near two-year lows [2] - Recent stimulus policies, including fertility subsidies and consumption enhancement plans, are expected to boost confidence in the education sector [2]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company's revenue, net profit attributable to shareholders, and adjusted net profit for 2024 are projected to be CNY 4.116 billion, CNY 0.513 billion, and CNY 0.525 billion respectively, representing year-on-year growth of 3.5%, 88.0%, and 86.6% [2] - The increase in net profit outpaced revenue growth due to improved gross margins and a comprehensive decline in expense ratios [2] - The company plans to distribute a final dividend of HKD 0.22 per share, with a payout ratio of 93.5% and a dividend yield of 5.1% [3] Summary by Sections Business Performance - The core business, New Oriental, saw a positive revenue growth rate in the second half of the year, with only the IT segment under pressure [4] - Revenue by segment for 2024 is projected as follows: Culinary Technology CNY 1.927 billion, Western Pastry CNY 0.343 billion, IT and Internet Technology CNY 0.763 billion, Automotive Services CNY 0.914 billion, Fashion Beauty CNY 0.105 billion, and Other Income CNY 0.224 billion, with respective year-on-year growth rates of 0.7%, 3.6%, -2.4%, 7.9%, 124.9%, and 9.1% [4] - The average training participants for new enrollments are projected at 143,000, with a year-on-year decline of 6.2% [4] Financial Metrics - The gross margin for 2024 is expected to be 51.4%, an increase of 3.4 percentage points year-on-year [7] - The net profit margin for 2024 is projected at 12.5%, reflecting a year-on-year increase of 5.6 percentage points [7] - The company’s total revenue for 2024 is expected to be CNY 4.116 billion, with a year-on-year growth of 3.46% [10] Future Outlook - Short-term performance is expected to exceed market expectations due to cost control measures [8] - Mid-term projections indicate a normalization of enrollments, with growth in long-term students gradually recovering [8] - Long-term advantages include competitive employment rates and the ability to quickly adjust courses to market changes [8] - The earnings per share (EPS) forecast for 2025 is CNY 0.28, with a price-to-earnings (PE) ratio of 14 [8]

Financial Performance - For the year ended December 31, 2024, the company reported a revenue of RMB 4,116 million, representing a 3.5% increase from RMB 3,979 million in 2023[5] - The gross profit for the same period was RMB 2,115 million, which is a 10.8% increase compared to RMB 1,908 million in 2023[5] - The net profit surged by 88.0% to RMB 513 million from RMB 273 million in the previous year[5] - Adjusted net profit increased by 86.6% to RMB 525 million from RMB 281 million in 2023[5] - The company reported a basic earnings per share of RMB 23.53, up from RMB 12.51 in 2023[5] - Adjusted net profit for the year ended December 31, 2024, was RMB 524.94 million, compared to RMB 281.34 million in 2023, while adjusted EBITDA was RMB 1,375.65 million, up from RMB 1,136.39 million[71] - The company's gross profit for the fiscal year ending December 31, 2024, was approximately RMB 2,115 million, with a gross margin of 51.4%, up from 48.0% in the previous year[62] - The cost of revenue decreased by 3.3% from approximately RMB 2,070 million for the fiscal year ending December 31, 2023, to about RMB 2,002 million for the fiscal year ending December 31, 2024[58] Operational Changes - The company has restructured its internal reporting segments, merging several educational divisions to enhance operational efficiency[18] - The company has restructured its business segments, integrating the operations of Meishi Academy into the New Oriental Cooking Education division, which now includes 75 schools[42] - The company adjusted its enrollment strategy and optimized course structure to attract more high-value new students, despite a 6.2% decrease in new training participants and new customer registrations[56] Training Participants and Customer Registrations - The number of new training participants and new customer registrations decreased by 6.2% to 143,441 from 152,881 in 2023[3] - New training participants in the cooking technology segment decreased by 7.7% from 68,473 in 2023 to 63,228 in 2024[48] - Long-term courses in information technology and internet technology saw a 15.0% decline, from 22,060 in 2023 to 18,755 in 2024[49] - The number of new customers registered for the cooking technology segment decreased by 6.7% from 28,600 in 2023 to 26,686 in 2024[48] - The fashion beauty education segment experienced a significant increase of 79.6% in new training participants, rising from 3,406 in 2023 to 6,118 in 2024[50] - The overall average training participants for the group remained relatively stable, with a slight decrease of 0.4%, from 146,839 in 2023 to 146,294 in 2024[52] Financial Assets and Liabilities - The company’s total liabilities, including trade and other payables, amounted to RMB 706,794,000 in 2024, compared to RMB 681,433,000 in 2023, reflecting an increase of approximately 3.7%[35] - The company held other financial assets of approximately RMB 550 million as of December 31, 2024, with a focus on investments that do not impact operational or capital expenditure needs[76] - The company has committed capital expenditures of RMB 152,099,000 for property and equipment acquisitions as of December 31, 2024, down from RMB 485,613,000 in 2023, indicating a reduction of approximately 68.7%[38] Dividends and Shareholder Information - The company proposed a final dividend of HKD 0.22 per share for the year ended December 31, 2024, totaling approximately HKD 479 million[30] - The board has approved a dividend policy to distribute at least 60% of the net profit attributable to shareholders for the fiscal years ending December 31, 2025, 2026, and 2027[94] - The company will suspend share transfer registration from May 22, 2025, to May 27, 2025, to determine shareholders eligible to attend the annual general meeting and vote[101] - The company will also suspend share transfer registration from June 3, 2025, to June 5, 2025, to determine shareholders entitled to the proposed final dividend[102] Employee and Staffing - As of December 31, 2024, the company employed a total of 10,346 staff, with full-time teachers and instructors making up 50.5% of the workforce[91] - The company aims to hire more teachers and staff as it expands its business, utilizing various recruitment channels[92] Compliance and Governance - The company has adopted the Corporate Governance Code and has complied with all its provisions for the fiscal year ending December 31, 2024[95] - The audit committee, composed of three independent non-executive directors, reviewed the company's consolidated financial statements for the fiscal year ending December 31, 2024, ensuring their completeness and accuracy[99] Future Plans and Market Position - The group aims to establish vocational education industrial parks to enhance its market position and brand, with ongoing projects in Sichuan, Shandong, Guizhou, and Henan[86] - The group plans to expand its campus network to cover all provincial capitals in China, focusing on cities with unmet demand in culinary arts, IT, automotive services, and fashion[87] - The group intends to diversify its course offerings in response to industry trends and market demand, with a focus on emerging sectors[88] - The company believes it has sufficient funds to meet its operational capital needs for future business expansion and development[75]

Core Viewpoint - China Oriental Education and Guangzhou Frans have established a strategic partnership to create the "Wantong·Frans Industry College," addressing the talent gap in the new energy vehicle industry, which currently stands at 1.03 million [1][5]. Group 1: Partnership Details - The unveiling ceremony of the "Wantong·Frans Industry College" took place at Anhui Wantong Technical College, marking a significant collaboration between the two companies [1][5]. - Key leaders from both organizations attended the ceremony, highlighting the importance of this partnership in enhancing vocational education [2]. Group 2: Educational Objectives - The partnership aims to develop a comprehensive talent cultivation system that integrates theoretical knowledge and practical skills, thereby improving the quality of technical talent in the industry [5][9]. - Both parties will focus on deepening the integration of industry and education, with an emphasis on co-developing courses, building training bases, and cultivating dual-qualified teachers [9]. Group 3: Strategic Goals - China Oriental Education will leverage its resources in vocational education, while Frans will contribute its industry expertise in logistics equipment, creating a new model for talent development [7][8]. - The collaboration is expected to facilitate the sharing of resources and mutual advantages, ultimately addressing the industry's talent shortage and enhancing the integration of education and industry [9].

Summary of Conference Call for China Oriental Education Company Overview - **Company**: China Oriental Education - **Document ID**: 1 Key Points Industry Performance - **Spring Enrollment 2025**: Achieved record highs in enrollment numbers, revenue, and fees, with growth exceeding 10% across all sectors including cooking and automotive [2][3] - **Short-term Courses**: Experienced significant growth, with enrollment increasing over 30% [2][3] Financial Performance - **Revenue Growth**: Projected revenue growth of approximately 7% for 2025, driven by a 5% increase in student numbers and a 2-3% increase in tuition fees [2][16] - **Net Profit Margin**: Expected to rise from 16% to between 19.9% and 20% by 2027 [2][16] - **Capital Expenditure**: Anticipated to decrease from over 900 million yuan in 2024 to 200-300 million yuan by 2027 [2][16] - **Dividends**: Expected to increase, with a minimum of 0.2 yuan per share in 2024 [2][16] Strategic Initiatives - **Cost Control**: Achieved a 2% reduction in customer acquisition costs and renegotiated rental contracts to lower costs by several million yuan [2][4] - **Market Focus**: Targeting unemployed graduates and students from vocational schools, leading to over 100% growth in a 15-month course [2][5] - **School Optimization**: Closing smaller city-level schools to concentrate resources on regional centers and provincial capitals [2][3] Competitive Landscape - **Public School Competition**: Company remains confident against public institutions, leveraging over 50 academic licenses and strong employment rates [2][7] - **Impact of COVID-19**: The pandemic accelerated the elimination of weaker competitors, allowing the company to strengthen its market position [2][8] Future Outlook - **Enrollment Trends**: Anticipated strong enrollment for fall 2025, benefiting from policy changes that encourage vocational education [2][9] - **Short-term Course Demand**: High-quality short-term courses saw a 36% increase in enrollment, reflecting a recovery in economic confidence [2][10] - **Employment Trends**: Stable employment rates across sectors, with IT and culinary fields showing strong demand [2][11] School Utilization - **Current Utilization Rates**: Overall school utilization has recovered to over 70%, with specific schools like Xinhua Computer School at 80% [2][13] Expansion Plans - **New Schools**: Plans to open new institutions in regions like Hangzhou and Shandong, with a focus on the beauty industry [2][18] Conclusion - **Long-term Growth**: The company is positioned for sustained growth with a focus on strategic market adaptation, cost efficiency, and quality education offerings [2][16][19]

Summary of China Oriental Education Conference Call Company Overview - **Company**: China Oriental Education - **Industry**: Vocational Education Key Points Overall Performance - The overall performance for 2024 met expectations, with profits significantly exceeding forecasts, indicating a return to normalcy and an upward trajectory [3] - Spring 2025 enrollment data showed record highs in student numbers, revenue, and fees, with growth exceeding 10% compared to previous years [3][4] Enrollment and Growth - Spring 2025 enrollment reached historical highs across all sectors, including cooking, automotive, IT, and beauty, with short-term courses seeing over 30% growth [3] - The company is targeting the market of students not pursuing further education, particularly focusing on the "four school" demographic and unemployed university graduates, leading to over 100% growth in a newly developed 15-month course [3][6] Cost Management and Efficiency - The company has implemented cost reduction strategies, including a 2% decrease in customer acquisition costs and renegotiated rental contracts resulting in savings of several million yuan [3][5] - Enhanced marketing effectiveness through improved ad targeting and efficiency, utilizing advanced data platforms for real-time monitoring [5] Future Projections - Anticipated continued growth in fall 2025 enrollment, driven by favorable market conditions and strategic adjustments made since 2023 [3][10] - Expected revenue growth of approximately 7% in 2025, with student numbers increasing by 5% and tuition fees rising by 2-3% [19] Competitive Landscape - The company remains confident in its competitive position against public institutions, citing superior market alignment and rapid curriculum updates [8] - The company has over 50 academic licenses, contributing to high employment rates for graduates, with a notable 98% college admission rate for certain programs [8] Impact of COVID-19 - The pandemic accelerated the elimination of weaker competitors, allowing the company to strengthen its market position and achieve profitability starting in 2024 [9] Capital Expenditure and Dividends - Projected capital expenditures will decrease from over 900 million yuan in 2024 to 200-300 million yuan by 2027, with operating cash flow exceeding 1 billion yuan annually [18] - Dividends are expected to increase, with a minimum of 0.2 yuan per share in 2024 [18] School Utilization and Expansion - Current school utilization rates have improved to over 70%, with specific centers achieving up to 90% [16] - Plans for new schools in regions like Hangzhou and Jinan, with a focus on maintaining quality and efficiency [21] Employment Trends - Employment rates vary by sector, with automotive and IT fields showing strong demand, while the culinary sector remains stable despite emerging trends [13] Tuition Trends - Tuition fees are expected to rise modestly, with an average increase of about 1% in 2025, driven by the introduction of new programs [15] Long-term Growth Potential - The company aims to maintain a revenue growth rate of over 5%, with potential to approach 10% by 2026 through strategic expansions and program enhancements [22][23]

Investment Rating - The report upgrades the investment rating of China Oriental Education to "Buy" [1][5][10]. Core Views - The company is expected to achieve high-quality growth in revenue and profit margins over the next three years, driven by refined operational strategies and market-oriented training systems [3][5][10]. - The average training participants are projected to grow at a compound annual growth rate (CAGR) of approximately 4% from 2024 to 2026, reaching 165,000 participants by 2026 [5][10][11]. - Revenue is anticipated to increase to 4.08 billion, 4.38 billion, and 4.69 billion yuan in 2024, 2025, and 2026, respectively, with a CAGR of 5.6% during the same period [5][10][11]. Summary by Sections 1. Refined Operational Strategy - The company has reduced the number of its teaching centers to 234, optimizing capacity utilization from 72.2% in 2023 to 75.9% in 2024, and further to 79.8% by 2026 [4][19][29]. - Marketing efficiency is expected to improve, with the marketing expense ratio decreasing from approximately 26.1% in 2023 to 23.8% in 2024, and further to 22.9% by 2026 [4][11][46]. 2. Expanding Market for High School and College Graduates - The company is developing mid-cycle courses of 15 months to 1.5 years to cater to the training needs of high school and college graduates, which is expected to enhance enrollment [51][52]. - The introduction of the Oumandi brand in the beauty and wellness training sector is projected to achieve 11,500 training participants by 2026, contributing 470 million yuan to total revenue, accounting for 10% [5][59]. 3. Financial Data and Profit Forecast - Revenue for 2024 is estimated at 4.08 billion yuan, with adjusted net profits expected to reach 488 million yuan, reflecting a significant increase from previous years [6][10]. - The net profit margin is projected to improve from 12% in 2024 to 14.8% by 2026, driven by scale effects and cost control measures [5][10][11].

Investment Rating - The investment rating for the company is "Buy" with a target price set at HKD 3.92, reflecting a potential upside from the latest closing price of HKD 2.85 [2][4]. Core Insights - The establishment of the first technician college by the company, recognized by the Anhui provincial government, signifies the company's commitment to enhancing vocational education and aligns with national policy initiatives [3]. - The college currently has over 8,100 students and 463 full-time teachers, offering 18 specialized programs, which is expected to attract more high school students and potentially extend the duration of study programs [3]. - The company aims to build a multi-tiered educational framework that includes vocational training, technical schools, and technician colleges, enhancing its ability to produce skilled talent in high-demand sectors such as new energy vehicles and intelligent manufacturing [3]. - The company is expected to see continued revenue growth driven by effective cost control and normalization of student enrollment, with projected revenues of HKD 41.5 billion, HKD 44.1 billion, and HKD 48.4 billion for the years 2024, 2025, and 2026 respectively [4][5]. Financial Summary - The company's revenue for 2023 is projected at HKD 3,978.65 million, with a year-on-year growth of 4.18%. The revenue is expected to grow to HKD 4,149.49 million in 2024, HKD 4,405.82 million in 2025, and HKD 4,841.54 million in 2026 [5][8]. - The net profit attributable to the parent company is forecasted to be HKD 272.62 million in 2023, increasing to HKD 496.06 million in 2024, HKD 596.04 million in 2025, and HKD 725.32 million in 2026, reflecting significant growth rates [6][8]. - The earnings per share (EPS) are projected to be HKD 0.23, HKD 0.27, and HKD 0.33 for the years 2024, 2025, and 2026 respectively, with a corresponding price-to-earnings (PE) ratio of 11, 9, and 8 [4][6].