Soaring ahead, ignoring the panic of the &#34;tariff war,&#34; China East Education (00667) seems to have hit a winning streak this year, with a cumulative stock price increase of 90%, outperforming the vocational education sector by more than 85 percentage points.
However, looking at a longer time frame, the company's market value peaked in 2021 and then rapidly declined due to sector and policy impacts, hitting a bottom rebound in 2024, during which it shrank by more than 90%. The investment environment and sector trends in 2025 are favorable, driving a continuous increase in the company's market value. Additionally, the company's performance has been somewhat unstable in recent years, but there is a noticeable improvement in 2024, especially in profitability, which has significantly increased.
According to Zhitong Finance APP, China East Education's 2024 financial report shows that it achieved revenue of 4.116 billion yuan for the year, a year-on-year increase of 3.5%, with a gross profit of 2.115 billion yuan, a year-on-year increase of 10.8%, and a net profit attributable to shareholders of 513 million yuan, a year-on-year increase of 88%. The gross margin and net margin increased to 51.38% and 12.46%, respectively. In addition, the company plans to distribute a final dividend of 0.22 HKD per share, with a dividend payout ratio of 93.5% and a dividend yield of nearly 4%.
Clearly, the company's performance and valuation are interconnected. So, after a significant rise in stock price this year, does China East Education still have opportunities?
<h2>Steady Performance Growth, Significant Profit Improvement</h2>
China East Education is a leading player in the Hong Kong stock market for vocational training. This differs from degree-based vocational education mainly in that the learning cycle is relatively shorter, revenue recognition is more frequent, and the specialization is stronger, resulting in a relatively high employment rate. The company owns five training brands, including New Oriental, O'Meich, Xinhua Computer, Wantong, and O'Mandi, with an average employment rate of 94.9% across these five brands in 2024.
In 2024, the revenue contributions from New Oriental, O'Meich, Xinhua Computer, Wantong, and O'Mandi were 46.6%, 8.3%, 18.54%, 22.2%, and 2.56%, respectively, with all brands maintaining growth during this period, particularly O'Mandi, whose revenue grew by over 120%. This is mainly attributed to &#34;volume and price&#34; drivers, with the average tuition and training participants for the company's brands increasing to varying degrees, with an overall average tuition of 27,600 yuan, a growth of 3.6%, and approximately 146,300 training participants, a slight year-on-year increase of 0.4%. <img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250416/1744789965227333.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="图片 1.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250416/1744789965227333.png"/>
Image source: Company financial report
Specifically, New Oriental focuses on culinary technology education, O'Meich on pastry and Western cuisine education, Xinhua Computer on information technology training, Wantong on automotive maintenance service training, and O'Mandi on fashion and beauty training. In terms of learning cycles, except for O'Meich, the other four major brands primarily offer long-term courses (over one year). In terms of average training participants, the proportion of long-term course training is as follows: New Oriental 87%, Xinhua Computer 95%, Wantong 93%, and O'Mandi 78%
In terms of fees, long-term courses are relatively expensive, with the average fee for long-term courses from the five major brands exceeding 20,000 yuan. Taking New Oriental as an example, the course fees for 2024 range from 29,400 to 180,000 yuan, while short-term courses range from 500 yuan to 78,800 yuan, showing a significant span. Additionally, 欧米奇 has the highest starting fee, with long-term courses starting at 42,000 yuan; however, this brand mainly focuses on short-term courses, with an average training participant ratio reaching 70%, and short-term course fees ranging from 800 yuan to 39,000 yuan.
The brands under China East Education have a leading advantage, especially New Oriental Cooking, which has become a benchmark in the industry with strong pricing power, resulting in an upward trend in profit margins. In terms of gross profit margin, in 2024, New Oriental, 欧米奇， 新华电脑， 万通， and 欧曼谛 had gross profit margins of 54.3%, 56%, 51.1%, 50%, and 54.6%, respectively, with year-on-year increases of 4.5, 8, 1.9, 1.1, and 28 percentage points. The overall gross profit margin was 51.4%, an increase of 3.4 percentage points year-on-year.
Expenses are also continuously being optimized. In 2024, the company's sales expense ratio, administrative expense ratio, and financing expense ratio were 23.66%, 12.34%, and 2.87%, respectively, with year-on-year decreases of 2.4, 13.72, and 0.63 percentage points. The overall period expense ratio was 38.87%, a decrease of 16.75 percentage points year-on-year. Thanks to the comprehensive optimization of gross profit and expenses, the company's adjusted EBITDA profit was 1.376 billion yuan, a year-on-year increase of 21.3%, with the profit margin rising to 33.43%, and net profit attributable to shareholders increasing by 88%, with the net profit margin rising to 12.46%.
<h2>The &#34;dark horse&#34; in the education sector, still looking high in the long term</h2>
From an industry perspective, in 2022, the scale of China's vocational education and training market exceeded one trillion yuan and maintained a stable growth rate. The vocational training industry grew at a single-digit compound growth rate, while vocational education grew at a slightly higher rate, but there is a certain complementary effect between vocational training and education. Against the backdrop of persistently high unemployment rates, ordinary positions are saturated, while more specialized positions still have a talent gap, bringing a new round of opportunities for vocational training.
In fact, whether in vocational training or vocational education, the capital market is quite sensitive to policies, and the trends are consistent, with both risks and opportunities present. In the Hong Kong stock market, China East Education is a rare target for vocational training, possessing uniqueness as an industry leader. In contrast, there are many targets in vocational education, including 中教控股， 新高教集团， and 中汇集团， among over 20 others.
Due to differences in learning cycles, tuition fees, and revenue recognition, the accounting cycles and profit margins of the vocational training and education sectors also vary. However, overall, vocational education has higher revenue stability and profit margins. For the fiscal year 2024, 新高教 and 中汇集团 both maintained double-digit revenue growth, with net profit margins exceeding 30%, which is more than 17 percentage points higher than that of China East Education.
<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250416/1744790065223915.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="图片 2.png" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250416/1744790065223915.png"/>
It is worth mentioning that the vocational education and training sector is rebounding in 2024, with China East Education standing out for three main reasons: first, as a rare target in the vocational training sector, it has gained higher attention; second, driven by volume and price, the company's profitability has rapidly improved, exceeding expectations in fundamentals; third, the company has long implemented a high dividend distribution policy, attracting long-term investors.
According to Dongfang Choice data, the company has distributed dividends 34 times since 2000, and even during the pandemic, it did not interrupt its dividends, with a total dividend amount reaching 8.51 billion yuan, equivalent to 79% of its current market value, and the dividend ratio for 2024 is expected to exceed 90%. The company's dividend policy indicates that, barring unforeseen circumstances, the board of directors has approved cash dividends to shareholders for the years ending 2025, 2026, and 2027 to account for no less than 60% of the net profit attributable to shareholders for those years.
In summary, China East Education is expected to achieve steady growth in performance in 2024, with a significant improvement in profitability, and has become a &#34;dark horse&#34; in the education sector for 2025. However, the current valuation is too high, with PB and PE ratios of 1.8 times and 20.4 times, respectively, while the vocational education sector has ratios of 0.4 times and 5.1 times. Short-term profit-taking may lead to a valuation pullback. In the long term, as the valuation of the vocational education sector recovers, the company is still expected to benefit from the sector's momentum

00667

China East Education performed strongly in 2024, with a cumulative stock price increase of 90%, significantly outperforming the vocational education sector. Although the company's market value had previously shrunk significantly due to policy impacts, the 2024 financial report shows revenue of 4.116 billion yuan, a year-on-year increase of 3.5%, and a net profit of 513 million yuan, a year-on-year increase of 88%. The company plans to distribute a dividend of HKD 0.22 per share, with a dividend yield of nearly 4%. The average employment rate of its five training brands reached 94.9%, demonstrating a good correlation between overall performance and valuation

Zhitong

CHINA EAST EDU

The "dark horse" of the education sector, CHINA EAST EDU is still viewed positively in the long term