Gold Control Financial News | Citibank's research report indicates that china edu group (00839) has issued a profit warning, expecting net income for the fiscal year 2024 to decline significantly to between 0.42 billion and 0.59 billion yuan, compared to 1.541 billion yuan for the fiscal year 2023. This significant decline is primarily due to one-time non-cash goodwill and intangible asset impairment losses, amounting to 1.68 billion to 1.75 billion yuan (after tax), involving cash-generating units in sichuan, shaanxi, and Australia.

The bank stated that although the company's core business remains stable, adjusted non-International Financial Reporting Standards profit increased by 5.4-10.3% year-on-year, and student enrollment grew by 5.2%, the market's reaction to this news is negative, with the stock price falling by 18%, reflecting deep-seated concerns about the company's prospects. Citibank believes that the impairment of assets in sichuan and shaanxi reflects the deterioration of mainland market conditions, exceeding management's expectations. The impairment in Australia is particularly concerning, potentially indicating that the company's international expansion global strategy will face policy headwinds, especially given the tightening of international student policies in Australia.

Citibank further pointed out that although the company's superficial indicators appear stable, the slight gap between non-International Financial Reporting Standards profit growth and enrollment growth suggests that the company's operation leverage is limited, which may lead to profit pressure. Therefore, a more detailed examination of the company's economic situation is necessary. The significant impairment losses have sent multiple warning signals, further reinforcing Citibank's stance on maintaining a 'sell' rating for the company.