Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 3.68 [1][5]. Core Insights - The company has entered a new phase of stable organic growth, shifting focus from external expansion to internal growth and value enhancement, with long-term profitability remaining robust [1][2]. - For FY25, the company reported total revenue of RMB 7.363 billion, a year-on-year increase of 11.9%, and a net profit of RMB 506 million, up 0.8% year-on-year, aligning with performance forecasts [1][3]. - The company has optimized capital expenditures to RMB 2.66 billion, a decrease of nearly 45% year-on-year, indicating a transition to a more cash flow-focused growth period [2][5]. Summary by Sections Financial Performance - FY25 domestic revenue grew by 11.8% and international revenue by 14.8%, continuing a trend of simultaneous volume and price increases [2]. - The full-time student enrollment reached 282,000, a 5% increase year-on-year, with the higher education segment seeing a 9% growth in enrollment [2]. - The gross profit margin for FY25 was 53.32%, a decline of approximately 2 percentage points due to increased investments in faculty and teaching quality [3]. Profitability and Taxation - The net profit for FY25 was RMB 506 million, with a one-time impairment of goodwill and intangible assets amounting to RMB 17.06 billion (after tax RMB 16.75 billion) impacting short-term results [3]. - The company’s income tax expense increased significantly to RMB 320 million, reflecting proactive optimization of the group structure [3]. Regulatory Environment - The Guangdong Provincial Education Department has released a draft for the classification management reform of private higher education institutions, which could support sentiment and valuation recovery for the company if successful [4]. Future Projections - Adjusted net profit estimates for FY26-28 are projected at RMB 2.037 billion, RMB 2.137 billion, and RMB 2.175 billion respectively, with a dividend policy expected to resume in FY27 at a 40% payout ratio [5][10]. - The company’s weighted average cost of capital (WACC) is maintained at 14.89%, with a perpetual growth rate of 1% [5][11].
中教控股（00839）：迈入稳健内生增长新时期