FAST NEWS: Fenbi back in the black on strong civil service exam demand
The latest: Civil service exam preparation company Fenbi Ltd. (2469.HK) said on Monday it will report a net profit of 166 million yuan ($23 million) or more for 2023, reversing a loss of 2.09 billion yuan in 2022.
Looking up: The return to profitability was mainly attributable to strong demand for tutoring for people preparing to take China’s civil service exam last year, as well as ongoing optimization of Fenbi’s cost structure, which helped to significantly boost its gross and net margins.
Take Note: Excluding share-based compensation, losses on financial liabilities measured at fair value and listing expenses, the company expects to report an adjusted profit of 420 million yuan or more for 2023.
Digging Deeper: Fenbi, whose name means “chalk” in Chinese, was formerly part of an online education services company, and was hived off as an independent entity in 2020 to focus on tutoring for China’s civil service examinations. It enjoys a leading position in online education for aspiring professionals looking for such jobs, which are considered relatively secure in economically uncertain times. Its online platform has 56.2 million registered users, and its average monthly active users rose from 6.5 million in 2021 to about 9.2 million at the end of June 2023. Last year, it raised about HK$200 million ($25.6 million) in its Hong Kong IPO.
Market Reaction: Fenbi’s shares closed down 4.6% at HK$4.76 by the midday break on Tuesday, down by roughly half from its IPO price of HK$9.90 last year.
Translation by A. Au
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