Core Viewpoint - The report from GF Securities projects that China Oriental Education (00667) will achieve adjusted net profits of 800 million, 1.02 billion, and 1.26 billion yuan for the years 2025 to 2027, respectively, indicating a recovery in growth and profitability for the company as a leading player in the industry [1] Group 1: Company Overview - The company has been deeply engaged in the vocational education sector for over 30 years, starting with culinary training in 1988 and now offering training in four major vocational skill areas with seven brands [2] - The company is expected to see a turning point in profitability in 2024, with projected revenues of 4.12 billion and 2.19 billion yuan for 2024 and the first half of 2025, respectively, reflecting year-on-year growth of 3.5% and 10.2% [2] - Adjusted net profits for 2024 and the first half of 2025 are projected to be 530 million and 400 million yuan, respectively, with significant year-on-year increases of 86.6% and 48.4% [2] Group 2: Industry Insights - The vocational skills training industry is characterized by strong employment orientation, with a large potential student base, and the company focuses on training blue-collar talent in the service sector, which maintains a high employment outlook [3] - The competitive landscape of the industry is fragmented, with clear competitive advantages for leading companies in various sub-sectors [3] Group 3: Competitive Advantages - The company creates a positive cycle through continuous research and development, practical-oriented teaching, and diverse professional training systems, resulting in high-quality products [4] - The company has established a solid reputation through deep integration of industry and education, with employment rates for its programs consistently above 90% [4] Group 4: Future Outlook - Following operational optimizations in 2024, brands such as New Oriental and Xinhua are expected to improve, while Ouman Di Meiyu is in a phase of expansion and rapid growth [5] - The high school graduate demographic is anticipated to become a significant source of new students, with a projected increase of 85.4% in new training participants for the first half of 2025 [5] - The establishment of regional centers since 2022 is expected to enhance the company's overall educational capacity and profitability [5]

Group 1 - The core viewpoint of the report is that China Oriental Education (00667) is expected to see adjusted net profits of 800 million, 1.02 billion, and 1.26 billion yuan for the years 2025 to 2027, indicating a recovery in growth and profitability, with a target price of 10.16 HKD per share based on a 20x PE ratio for 2026 [1] - The company has been a leader in vocational education for over 30 years, starting with culinary training and expanding into four major training sectors, with a projected revenue of 4.12 billion and 2.19 billion yuan for 2024 and the first half of 2025, respectively, showing year-on-year growth of 3.5% and 10.2% [1] - The adjusted net profit for 2024 and the first half of 2025 is expected to be 530 million and 400 million yuan, reflecting significant year-on-year increases of 86.6% and 48.4% [1] Group 2 - The vocational skills training industry is characterized by strong employment orientation and sustainable demand growth, with a large potential student base, primarily focusing on blue-collar talent development in the service sector [2] - The competitive landscape of the industry is fragmented, with clear differentiation among leading companies in various segments [2] - The company maintains a positive cycle of teaching research, employment services, and operational recruitment, achieving over 90% employment rates for its graduates through continuous research and practical-oriented teaching [3] Group 3 - Future prospects include positive development across various brands and the anticipated impact of regional centers, with New Oriental and Xinhua entering a phase of improvement and structural optimization [4] - The high school graduate demographic is expected to become a significant source of new students, with a projected increase of 8,540 training participants in 2025, representing a year-on-year growth of 85.4% [4] - The establishment of regional centers since 2022 is expected to enhance the company's overall educational capacity and profitability [4]

Group 1: Company Performance - China Oriental Education reported a revenue of 2.186 billion yuan for 1H25, representing a year-on-year growth of 10.2% [1] - Adjusted net profit for 1H25 was 416 million yuan, showing a significant year-on-year increase of 49.5% [1] - The adjusted net profit margin reached 19%, an increase of 4.99 percentage points compared to the previous year [1] Group 2: Industry Trends - The vocational skills training sector is experiencing a recovery, with new training participants reaching 83,500 in 1H25, a year-on-year increase of 7.1% [2] - All five major skill training segments (cooking, automotive repair, computer, pastry, and beauty) saw year-on-year growth in new training participants, with the beauty segment leading at 34.1% [2] - The number of high school graduates is expected to rise, driven by an increase of 2.6 million graduates from 2021 to 2024, which will boost the vocational skills training market [2] Group 3: Strategic Initiatives - The company is focusing on developing new programs to capture the growing demand for vocational training among high school graduates, launching a 15-month training program that saw a participant increase of approximately 85.4% [3] - The company emphasizes its strengths in core vocational training areas, maintaining a focus on long-term training programs for junior high school graduates, which also saw a year-on-year increase of 4.5% in new participants [3] - The company is implementing refined management practices to enhance operational efficiency, resulting in a gross margin of 57.3%, up 4.3 percentage points from the previous year [4] Group 4: Financial Outlook - The company has raised its adjusted net profit forecasts for 2025 to 792 million yuan, 976 million yuan for 2026, and 1.211 billion yuan for 2027, reflecting an upward revision from previous estimates [4] - The target price has been adjusted to 12.56 HKD, up from 11.06 HKD, while maintaining a buy rating for the company [4]

Investment Rating - The investment rating for the company is maintained as "Buy" [2][8] Core Views - The company reported a revenue of 2.186 billion RMB for the first half of 2025, representing a year-on-year growth of 10.2%. The adjusted net profit reached 416 million RMB, up 49.5% year-on-year, with an adjusted net profit margin of 19%, an increase of 4.99 percentage points compared to the previous year [5][8] - The vocational training sector is experiencing a recovery, with new training participants reaching 83,500, a 7.1% increase year-on-year. All five major training segments (cooking, automotive repair, computer, pastry, and beauty) saw growth, with the beauty segment leading at 34.1% [6][8] - The company is strategically developing new programs to capture the increasing demand for vocational training among high school graduates, launching a 15-month training program that saw a participant increase of approximately 85.4% [7][8] - The company continues to implement refined management practices to enhance operational efficiency, achieving a gross margin of 57.3%, up 4.3 percentage points year-on-year, while marketing expenses decreased by 0.94 percentage points to 22.5% [8] Financial Data and Profit Forecast - The company forecasts revenue growth from 3.979 billion RMB in 2023 to 5.649 billion RMB in 2027, with a compound annual growth rate (CAGR) of approximately 13.87% [10][12] - The adjusted net profit is projected to increase from 281 million RMB in 2023 to 1.211 billion RMB in 2027, reflecting a significant growth trajectory [10][12] - The earnings per share (EPS) is expected to rise from 0.13 RMB in 2023 to 0.55 RMB in 2027, indicating strong profitability growth [10][12]