The latest: Chinese vocational educator Minsheng Education Group Co. Ltd. (1569.HK) announced on Wednesday that its net profit fell 12% in the first half of the year to 339 million yuan ($50 million), and added it won’t distribute an interim dividend.

Looking up: Despite the challenges of disruptive Covid control measures throughout the reporting period, the group still managed to post 2.9% year-on-year revenue growth to 1.27 billion yuan, benefiting from higher tuition and boarding fee income.

Take Note: The profit decline was mainly due to an increase of over 10% in administrative, selling and distribution expenses, as well as a 22% increase in financing costs.

Digging Deeper: China’s private education sector has suffered a major blow under the government’s “double reduction” policy launched last July, which aimed to ease the work burden on K-12 students. But private investment in vocational education, with its focus on adult learning, has been spared that pain and is even being encouraged. With the implementation of a newly revised Vocational Education Law in May, Beijing has clearly established that vocational education is of equal importance to general education, and is supportive of participation by private enterprises in the sector. As a private vocational education group, Minsheng Education’s business has benefited and recorded a 116% year-on-year jump in revenue and a more than three-fold increase in net profit last year. The company has also acquired major stakes in several online education companies, making it one of China’s largest “internet + vocational” educators.

Market Reaction: Minsheng Education’s shares sank Thursday morning, ending down 3.2% at HK$0.61 at the midday break. The stock now trades at the lower end of its 52-weeks price range.

Translation by Jony Ho

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