According to a report published by Jianyin International, China Edu Group (00839.HK) is expected to see a 70% year-on-year decline in net profit for the 2024 fiscal year, dropping to 0.418 billion yuan due to a non-cash impairment loss of 1.547 billion yuan related to its goodwill and intangible assets in the school operations business in Sichuan, Shaanxi, and Australia. Excluding these losses and other non-core items, the adjusted net profit would increase by 3% year-on-year to 1.971 billion yuan.

As for China Edu Group's revenue for the 2024 fiscal year, it was up 17% year-on-year to 6.579 billion yuan, driven by a 9% increase in student enrollment. The gross margin and operating profit margin contracted by 0.9 and 1.8 percentage points to 55.4% and 37.8% respectively. The company maintains a dividend payout ratio of approximately 40%.

The bank has downgraded its earnings forecasts for China Edu Group for the 2025 and 2026 fiscal years by 8% and 9%, respectively, and has lowered the target price from 6.8 yuan to 4.6 yuan, maintaining a "outperform market" rating, believing the company's growth is stable.