Investment Rating - The report gives a "Buy" rating for China Oriental Education with a target price of HKD 10.05, indicating a potential upside of 51.3% from the current price of HKD 6.64 [3][6]. Core Insights - China Oriental Education, established in 1988, is the largest vocational skills education provider in China, focusing on five main areas: culinary arts, Western pastry and cuisine, information and internet technology, automotive services, and fashion beauty [4][15]. - The company has shown a compound annual growth rate (CAGR) of 20.89% in revenue from 2015 to 2019, driven primarily by the number of training participants. However, revenue growth slowed from 2020 to 2022 due to external factors such as restrictions on in-person classes and competition from general high school policies [4][27]. - The company has adapted its business strategy in response to changing market conditions, leading to a recovery in performance starting in 2024, with revenue and net profit showing significant year-on-year growth [4][6]. Company Overview - China Oriental Education operates under several brands, including New Oriental Culinary Education, Xinhua Computer, and Wan Tong Automotive, among others. As of June 2025, the company has 234 schools across various provinces and regions [15][17]. - The company’s revenue for the first half of 2025 was HKD 21.9 billion, representing a year-on-year increase of 10.2%, with net profit reaching HKD 4.0 billion, up 48.4% [4][44]. Industry Analysis - The vocational education market in China is projected to grow significantly, with the total market size expected to increase from RMB 516.7 billion in 2016 to RMB 1.1 trillion by 2026, reflecting a CAGR of 7.8% [74]. - The demand for vocational education remains strong despite the increasing number of general high school graduates, as many young individuals face higher unemployment rates and seek vocational training to enhance their employability [67][68]. - The report highlights a shift in the education landscape, where institutions with strong teaching capabilities and research strengths are better positioned to capture market share amid increasing competition [61][62].

Core Viewpoint - China Oriental Education (00667) is recognized as a leading vocational training institution in China, leveraging its strong national presence and brand power to meet the robust demand for high-skilled talent in the labor market [1] Financial Performance - In the first half of 2025, the company's revenue reached 2.186 billion yuan, reflecting a year-on-year growth of 10.2%, while the net profit attributable to shareholders was 403 million yuan, marking a significant increase of 48.4% [3] - The gross profit margin improved to 57.3%, an increase of 4.3 percentage points, indicating effective cost control alongside business expansion [2][3] Segment Performance - Revenue from culinary technology was 1.024 billion yuan, up 11.4%, with a gross margin of 60.5% [4] - Revenue from pastry and western cuisine reached 182 million yuan, growing 14.3%, with a gross margin of 60.4% [4] - Information technology and internet technology revenue declined by 3.0% to 367 million yuan, but the gross margin increased to 57.6% [4] - Automotive services generated 492 million yuan, a 9.6% increase, with a gross margin of 54.7% [4] - Fashion beauty industry revenue surged by 90.2% to 77 million yuan, with a gross margin of 61.4% [4] - Other business revenue was 44 million yuan, up 18.2%, but with a negative gross margin of 8.6% [4] Business Expansion - As of the first half of 2025, the company operates 234 schools and centers across almost all provinces in mainland China and Hong Kong, having acquired Shanxi Metallurgy Technician College during the period [5] - The average number of trainees for long-term courses was 134,100, a year-on-year increase of 4.9%, accounting for 87.8% of total trainees [5] - New enrollments reached 83,500, reflecting a 7.1% increase compared to the previous year [5]

Investment Rating - The report maintains a "Buy" rating for China Oriental Education, indicating a positive outlook for the company's stock performance relative to the local market index [14][21]. Core Insights - The company is expected to experience a dual improvement in performance and valuation, driven by its strong brand influence in various training sectors such as culinary arts, pastry, information technology, and automotive services [2][14]. - Revenue for the first half of 2025 is projected to grow by 10.2%, with a gross margin increase to 57.3%, reflecting effective business expansion and cost control [2][14]. - The company operates 234 schools and centers across mainland China and Hong Kong, with a steady increase in training participants [4][14]. Financial Summary - Revenue projections for the years 2024 to 2027 are as follows: - 2024: 4,116 million RMB - 2025: 4,585 million RMB (up 11%) - 2026: 5,088 million RMB (up 11%) - 2027: 5,591 million RMB (up 10%) [5][12] - Net profit forecasts for the same period are: - 2024: 513 million RMB - 2025: 798 million RMB (up 56%) - 2026: 1,004 million RMB (up 26%) - 2027: 1,128 million RMB (up 12%) [5][12] - Earnings per share (EPS) estimates are: - 2024: 0.24 RMB - 2025: 0.36 RMB - 2026: 0.45 RMB - 2027: 0.51 RMB [5][12]. Market Performance - The stock price has fluctuated between 2.43 and 9.05 HKD over the past 52 weeks, with a current market capitalization of 13,808 million HKD [8][12]. - The report suggests a target price of 9.0 RMB, equivalent to approximately 9.9 HKD, based on a 20X PE valuation for 2026 [14].

Core Insights - The company reported revenue, net profit attributable to shareholders, and adjusted net profit for H1 2025 at 2.186 billion, 403 million, and 416 million yuan respectively, showing year-on-year growth of 10.2%, 48.4%, and 49.5%, aligning with performance forecasts [1] - The improvement in performance for 2024 is attributed to cost and expense control, while H1 2025 shows accelerated revenue growth driven by improved enrollment, particularly in three-year programs which grew by 4.5% and one- to two-year programs which surged by 85% [1] - The company experienced a positive operating leverage effect with an adjusted net profit margin increase of 5 percentage points due to accelerated revenue growth [1] Business Performance - New Oriental's revenue and operating profit accounted for 45% and 60% respectively, with significant growth in the beauty industry and a turnaround from losses [1] - Revenue from various segments for H1 2025 includes: culinary arts (1.026 billion yuan, +11.2%), pastry and western cuisine (182 million yuan, +14.3%), IT and internet technology (367 million yuan, -3.0%), automotive services (493 million yuan, +9.7%), fashion and beauty (77 million yuan, +90.2%), and others (129 million yuan, +31.5%) [1] - Average training participants for different segments showed growth: culinary arts (62,000, +8.3%), pastry and western cuisine (5,500, +18.5%), IT and internet technology (37,000, -6.8%), automotive services (43,000, +6.3%), and fashion and beauty (6,000, +76.2%) [1] Enrollment and Employment - The total number of schools increased to 234, with a net addition of one school (+0.4%) [2] - New enrollment figures for various programs include: culinary arts (36,500, +5.2%), pastry and western cuisine (7,600, +0.7%), IT and internet technology (14,000, +6.4%), automotive services (21,500, +9.3%), and fashion and beauty (3,900, +34.1%) [2] - Employment rates improved across institutions, with New Oriental at 95.7%, Xinhua Computer at 94.0%, and others showing similar increases [2] Profitability and Cost Management - The company's gross margin for H1 2025 was 57.3%, an increase of 4.3 percentage points, driven by higher capacity utilization and reduced rental expenses [3] - The net profit margin attributable to shareholders rose to 18.4%, up 4.7 percentage points, with the increase primarily due to declines in sales, management, and financial expense ratios [3] - The company employed 10,365 people in H1 2025, a decrease of 2% year-on-year [3] Investment Outlook - Short-term expectations indicate strong autumn enrollment and continued performance exceeding forecasts due to cost control [3] - Mid-term projections suggest accelerated revenue growth based on the recovery of long-term enrollments, with culinary arts and automotive services maintaining rapid growth [3] - Long-term advantages include competitive employment outcomes and the ability to quickly adjust courses to market changes, with anticipated completion of regional center construction and technician college accreditation [3]

Investment Rating - The investment rating for the company is "Outperform the Market" [6][4][29] Core Views - The company has experienced a significant acceleration in revenue growth, achieving 2.186 billion yuan in revenue for the first half of 2025, a year-on-year increase of 10.2%, marking a new high since its listing. The net profit reached 403 million yuan, up 48.4% year-on-year, closely approaching the upper limit of previous forecasts [1][9] - The company is benefiting from a favorable employment environment, leading to a recovery in long-term student enrollment and a steady increase in average tuition fees. The average tuition fee for the first half of 2025 was 28,000 yuan, reflecting a year-on-year increase of 4.3% [2][4][18] Summary by Sections Revenue and Profitability - In the first half of 2025, the company achieved a revenue of 2.186 billion yuan, with a net profit of 403 million yuan, indicating a strong performance with a net profit margin of 19.0%, up 5.0 percentage points year-on-year [1][3][20] - The company’s gross profit margin was 57.3%, an increase of 4.3 percentage points, suggesting significant room for further improvement in profitability [3][20] Enrollment and Tuition - The company enrolled 84,000 students in the first half of 2025, a 7% increase year-on-year, with the fashion beauty industry showing the highest growth rate among various programs [2][13] - The average training fee per student increased to 28,000 yuan, with a notable rise in tuition fees for specific programs such as culinary arts and fashion beauty [18][25] Cost Control and Efficiency - The company has effectively controlled costs, with a reduction in research, sales, and management expense ratios, leading to improved operational efficiency [3][20] - The company has also completed adjustments to its campus structure, with a total of 234 schools, including three vocational colleges, enhancing its educational offerings [23][25] Future Outlook - The company is expected to see revenue growth rates of 10.2%, 12.6%, and 13.3% for 2025, 2026, and 2027, respectively, driven by an increase in student enrollment and tuition fee adjustments [25][26] - The forecasted net profit for 2025 is 860 million yuan, reflecting a significant increase of 67.8% year-on-year, with further growth anticipated in subsequent years [4][26]

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company's revenue and net profit for the first half of 2025 are projected to be 2.186 billion and 403 million CNY, respectively, showing year-on-year growth of 10.2% and 48.4% [2] - The improvement in the company's performance in 2024 is primarily attributed to cost and expense control, while the enrollment growth in 2025 is expected to accelerate revenue, particularly in the three-year program which grew by 4.5% and the one-to-two-year program which saw an impressive growth of 85% [2] - The company is expected to benefit from positive operating leverage, with adjusted net profit margin increasing by 5 percentage points [2] Summary by Sections Revenue and Enrollment - The company reported a significant increase in enrollment, with new registrations for the culinary technology and beauty sectors growing by 5.2% and 34.1%, respectively [4] - The total number of schools is 234, with a net increase of 1 school year-on-year [4] Financial Performance - The gross margin for the first half of 2025 is 57.3%, an increase of 4.3 percentage points year-on-year, driven by increased capacity utilization and reduced rental expenses [5] - The net profit margin for the first half of 2025 is 18.4%, reflecting a year-on-year increase of 4.7 percentage points, primarily due to a decrease in sales, management, and financial expense ratios [5] Future Outlook - Short-term expectations indicate strong autumn enrollment, with the potential for continued performance exceeding expectations throughout the year [7] - Mid-term projections suggest accelerated revenue growth in the coming years, particularly in culinary and automotive sectors, with ongoing improvements in profitability [7] - Long-term advantages include competitive employment outcomes and the ability to quickly adjust courses in response to market changes [7] Earnings Forecast - The company maintains revenue forecasts of 4.464 billion, 4.868 billion, and 5.390 billion CNY for 2025, 2026, and 2027, respectively [7] - The projected net profit for the same years is 801.94 million, 973.21 million, and 1.18293 billion CNY [7] - The earnings per share (EPS) forecast for 2025, 2026, and 2027 is 0.36, 0.44, and 0.54 CNY, respectively [7]