At the beginning of 2024, BEDU.US (BEDU.US) raised its stock price from $1.25 to a maximum of $3.23 in 2 months, with a cumulative increase of 158.4%. When the market thought that the stock price of this education company, which focuses on running schools overseas, was about to take off, Bushelle Education began a nine-month period of sideways fluctuation.

The Zhitong Finance App observed that after hitting a high of 3.23 US dollars in the intraday market on March 1 this year, Busile Education's stock price fell 10.78% in March, falling back below 2 US dollars, and then the stock price fluctuated between 1.5 and 2 US dollars.

On November 25, Bushelle Education released financial results for the Q4 and 2024 fiscal years ending August 31, 2024. Financial reports show that in the Q4 quarter of FY2024, Bushelle Education's revenue decreased 19.0% year on year, and net loss increased 195.2% year on year; throughout fiscal year 2024, the company's revenue from continuing operations fell 0.96% year on year.

Regarding this financial report, the performance of the secondary market was lackluster. The company's stock price rose and fell during the 4 trading days from November 26 to December 2 after the financial report was disclosed. Although there seems to be no clear reaction to the financial report, the market intentions of the main capital on the market are beginning to become more and more obvious.

After a long period of sideways trading, when to start is critical

After the disclosure of the 2024 annual report, Buscile Education's stock price trend seemed lackluster. There was no sharp decline due to the expansion of Q4 company's losses, and there were no signs of a rebound due to a 17% year-on-year increase in overseas business revenue during the period mentioned in the financial report. Also, judging from the trading volume, in the 4 trading days from November 26 to December 2, its maximum daily trading volume did not even exceed 5,000 shares. It is easy for investors to think that it has been abandoned by the market and fell into a liquidity trap, but judging from historical transactions, this does not seem to be the case.

As mentioned above, after hitting an intraday high on March 1 of this year, Bushelle Education's stock price fell rapidly throughout March, and the company's stock price had fallen below $2 by April. In terms of trading volume, from March to now, Bushelle Education's single-day trading volume has exceeded 0.03 million shares in just 6 trading days, namely March 19, April 1, April 8, April 22, May 13, and July 31. It can be seen that after April, Bushelok Education's trading activity declined significantly.

Overall, from April to November of this year, Bushelle Education's stock price remained around 1.7 US dollars, and within these 8 months, the company's stock price increased by only -1.09%, almost maintaining an ultra-stable sideways trading effect. The sideways trading phase is undoubtedly a good opportunity for buyers to attract funds. At this stage, large amounts of chips are piled up at a low level.

In this process, the main buyer used part of the chips to suppress the deal, and at the same time undertook to sell the chips, so that most of their chips remained on hold and locked in the fund-absorbing area, waiting for a high-ranking profit settlement. As can be seen from the chip segment chart, no matter how the stock's high sell-off and low-yield are interpreted, its low chip concentration area ($1.84 to HK$2.16) has not changed. Also, after April of this year, Bushelle Education's market turnover has declined markedly, indicating that the market is selling fewer orders, and the chips locked in by the main players are gradually increasing.

The most obvious sign is that on November 29, after the disclosure of this financial report, Bushelle Education relied on the trading volume of 102 shares alone to reduce the day's stock price by 5.41%, and the next day it relied on 4,228 shares to raise the stock price by 5.14%.

At present, the low single-peak intensive pattern around the average cost of 2.02 US dollars has basically formed. Once the stock price volume breaks through a single peak and is concentrated, it may be a sign of a round of upward market growth. At that time, the greater the concentration of single peaks, the more adequate chip changes, and the stronger the stock price attack will be.

After putting aside the “burden of goodwill”, performance may become a barometer of stock prices

Going back to the FY24 Q4 financial report and full-year financial report disclosed by Busile Education this time, it is easy for investors to see a shift in the focus of the company's performance and a shift in performance to the positive.

Specifically, Buscile Education's fourth quarter revenue was 0.358 billion yuan, down 19.0% year on year, and net loss was 1.005 billion yuan, up 195.2% year on year. However, the adjusted net loss was 92 million yuan, a decrease of 24.3% year over year.

The company's current revenue declined, mainly due to a decline in revenue from businesses other than overseas business. By sector, revenue from overseas schools increased by 0.2%, revenue from supplementary education services decreased by 20.0%, and revenue from domestic kindergartens and K-12 operating services decreased by 54.6%. As a result, the company's current operating loss was RMB 0.942 billion, up 316.3% year on year; adjusted operating loss was RMB 78.8 million, up 23.1% year on year.

Looking at the full year of 2024, the company's current revenue from continuing operations was 1.755 billion yuan, a slight decrease of 0.96% year on year; among them, overseas school revenue increased 17.5% year on year, gross profit from continuing operations increased 7.7%, and gross margin increased 2.3 percentage points. At the same time, the company's current operating loss was RMB 0.869 billion, an increase of 142.7% over the previous year; adjusted net profit was RMB 1.1 million, reversing the loss. In terms of cash flow, as of August 31, 2024, the company had cash, cash equivalents and restricted cash of RMB 0.506 billion, an increase of 20.4% over the previous year.

In the company's Q4 earnings report mentioned above, investors need to see the steady increase in overseas business revenue under Bushelle Education's overseas transformation strategy through growth and loss data, as well as larger net loss data compared to the year-on-year decline in revenue.

After the “double reduction” policy in 2021 confirmed that it would end the domestic K12 business, Bushelo stated in its financial report for that year that “it will seek acquisition opportunities, and plans to maintain acquisitions while growing organically, and continue to seek opportunities in overseas markets and supplementary education services.”

In fact, after 3 years of development, the overseas business has become Bushelle Education's core revenue business, accounting for 54.2% of revenue in the 2024 fiscal year. In contrast, the domestic kindergarten and K-12 operation service business, where the company's revenue declined the most in this fiscal year, can actually be considered to some extent the “tail” after the “double reduction” policy. There is no long-term negative impact on Bushele Education, which has switched its focus to overseas business.

Another net loss data, which is larger than the year-on-year decline in revenue, is rooted in the impairment loss of goodwill of Buscile Education.

Since the acquisition of existing international schools is the main way for the international school group to expand, after shifting its focus to overseas business, Bushelle Education was no exception.

According to the Zhitong Finance App, Buscile Education's “buy buy” model dates back to before the epidemic. As early as 2018, Buscile Education acquired 75% of the shares in the 5 Xinqiao kindergarten chains in Wuhan; in April, October, and December of that year, it successively acquired 80% of the shares of Wuhan Sanniu Education, a company that manages 8 kindergartens in Shandong Province, and wholly acquired Bournemouth School in the UK.

In 2019, Bushela bought St. Michael's School and Bosworth School in the UK for £38 million, and in July of that year, it acquired all of the shares in the British education group CATS for £0.15 billion. In addition to this, Buscile has also successively acquired many institutions such as Eli English, Jiacheng Education, Fan Dixin International Education, Dreambition Career, Hangzhou Impression International Art Education, and Beiwei. After 2020, Bushelle Education once again acquired 60% of Hanlin College and Sports Camp Education and 18% of Golden Ballet Dance; in September 2023, DBC Zhimeng, a subsidiary of the company, also completed a strategic acquisition of the pre-employment education brand CareerBuddy.

Currently, there are hundreds of schools at home and abroad under Bushelle Education, and the goodwill problem accumulated by “buy buy buy” is also a thunderbolt in its financial report.

In the 2024Q4 financial report, the reason why Buscile Education's net loss reached 1.005 billion yuan was that it accrued an impairment loss of goodwill of 0.594 billion yuan in the current period. Currently, the company's net goodwill value fell from 1.111 billion yuan in fiscal 2023 to 0.527 billion yuan. However, on the other hand, the company's adjusted net profit for the full year was 1.1 million yuan, which has already reversed losses. This may be a sign that the company's performance will improve in the future.

As mentioned above, under the current situation where the main capital is highly controlled, Busile Education's secondary market is mostly stuck at a low level and locked in the fund-raising area, waiting for the high-ranking profit settlement. After leaving behind the burden of goodwill, the company's favorable performance in the future may become an important opportunity for the main players to break away from the cost area and open up profit margins.