FAST NEWS: Minsheng Education’s profit sinks on expansion costs
The Latest: Chinese vocational educator Minsheng Education Group Co. Ltd. (1569.HK) issued a profit warning last Friday, forecasting its net profit for the first half of this year will drop by about 64% from 307 million yuan in the same period last year.
Looking Up: The company’s costs have risen as a result of higher investment in the business, which may help to increase future revenues.
Take Note: The main reasons for the decline in its earnings were a sharp rise in the cost of its professional teaching team due to its expansion, an increase in tax expenses, and a sharp decline in net profit from its online education business.
Digging Deeper: China’s private education sector has suffered a major blow under the government’s “double reduction” policy launched in 2021, 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. As a private vocational education group, Minsheng Education’s business has benefited. The company’s revenue has remained stable at over 2.3 billion yuan over the past three years, but has been on a downward trend in recent years as costs have increased.
Market Reaction: Minsheng Education’s shares plunged on Monday, closing down 11.2% at HK$0.174 by the midday break, a 52-week low.
Translation by A. Au
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