According to a research report from Guosen Securities, CHINA EDU GROUP (00839) achieved revenue of 6.579 billion yuan in the fiscal year 2024, a year-on-year increase of 17.2%, close to the bank's previous revenue expectation of 6.604 billion yuan; Net income attributable to the parent company was 0.418 billion yuan, down 69.7%, while adjusted net income attributable to the parent was 1.971 billion yuan, up 3.3%. The discrepancy mainly arose from impairments of goodwill and intangible assets from the three schools in the group this fiscal year. From a market perspective, the company achieved revenue of 6.335 billion yuan in the domestic market this fiscal year, representing an increase of 17.4%. As of August 2024, the group has approximately 0.27 million full-time students, an increase of 9%, including 0.224 million higher education students, an increase of 12.5%, and 0.046 million students in secondary vocational education, a decrease of 6.1%. The international market segment reported revenue of 0.244 billion yuan, up 10.9%.

The bank stated that the three schools recognized impairments of 1.16/0.56/0.19 billion yuan respectively, resulting in total impairment losses of 1.72 billion yuan after deducting deferred income tax. Tuition fees in the Sichuan school were lower than expected, and enrollment at the Xi'an campus and the Australian campus was below expectations. Currently, the intangible assets of the Sichuan and Shaanxi campuses are relatively low, so the probability of further impairment is low. At the end of the period, the company reported goodwill of 2.49 billion yuan and other intangible assets of 4.08 billion yuan.

The bank adjusted the forecast for the adjusted net income attributable to the parent company for 2025/26 to 2.161/2.345 billion yuan (adjustment of -11%/-14%), and added a forecast for 2027 of 2.515 billion yuan, corresponding to P/E ratios of 4.3/4.0/3.7x. Overall, higher education enrollment continues to progress steadily during the period, and the company's revenue maintains robust growth. Looking ahead, alongside the expansion projects in Guangdong and ShanDong, organic growth is expected to continue, and with the peak of capital expenditures behind and the gradual improvement of financial rates, profitability is also expected to improve. The rating is maintained at "outperform the market," and attention is recommended to be paid to the pace of profitability improvement and the progress of selection and operation.