Declining revenues, widening losses remove polish from Hiducation IPO

China’s fourth largest online vocational educator is looking for a high-tech boost from AI to jumpstart its business, as it searches for elusive profits

Key Takeaways:

• Hiducation has filed to list in Hong Kong, but declining revenues and deepening losses in the first half of this year could undermine its investor appeal
• As the top-ranked provider of training in construction industry skills, the company’s exposure to China’s ongoing property downturn is another negative

By Edith Terry

Beijing Hiducation Technology Corp. Ltd. hopes to educate investors about the growing importance of vocational training in China with its application for a Hong Kong listing last week. But the company could quite possibly get its own lesson from those same investors, who may decide to take a pass on its story tied closely to China’s ailing property market.

Hiducation may be using its application to test investor appetite for a company that’s China’s largest online vocational educational firm for the construction industry, and second largest in emergency services.

With a gross profit margin of 85.8% in the first six months of 2025, Hiducation certainly looks quite attractive in terms of that metric. The company is hoping to follow in the footsteps of leading vocational educator China East Education (0667.HK), which raised $625 million in 2019, making it the world’s largest education float at that time.

But investors haven’t been kind to China East Education’s shares, which have lost about half their value since then. That said, China East Education’s gross margin was just 59% in the first half of this year, well below Hiducation, though its top and bottom lines are both much healthier, with its revenue and profit up 10% and 48%, respectively, for the period. By contrast, Hiducation lost money in the same period, and its revenue also declined.

Hiducation has grown rapidly since it launched its first brand, Haixue Classroom, in 2010 for vocational learning, and its premium credentials training brand, Jingjin Academy in 2018. But it has also been mired in losses since at least 2022, the earliest year covered in its listing document. And as we’ve already noted, its core products are tilted towards jobs in a Chinese property market that has been in the doldrums for the last few years.

Hiducation’s third brand, ShuPeiTong, which provides training services to corporate customers, has been among its weakest performers, as the sagging property market has made most companies unwilling to spend money to train construction workers that are already in abundant supply due to anemic new building activity.

Adding to its woes, Hiducation has becomes a frequent target of consumer ire, with 8,414 complaints on the Black Cat complaint platform, according to a recent count in Chinese media. On the same day as the IPO filing, one person complained about being tricked into buying a costly training program and later denied a refund. Similar complaints have been a recurrent theme for the company, first surfacing as early as 2020 on the Consumer Rights Protection Day investigative program aired each March by leading broadcaster CCTV.

The company’s marketing budget represents over 60% of revenue, which may not only explain its recurrent losses, but could also reflect the company’s hard-selling tactics that have led to the complaints. The listing document shows that Hiducation’s sales and marketing team accounted for a full 80% of its workforce in June this year.

Performance reversal

Up until recently, Hiducation’s losses were narrowing and its revenue seemed to be on a healthy track. It was playing in a broader Chinese vocational education market that looked set for strong growth, thanks in no small part to strong policy support from Beijing. The market for online professional skills and qualification education in China has grown from 37.5 billion yuan ($5.2 billion) in 2020 to 46.9 billion yuan last year. Hiducation ranked fourth in the industry, with 1.1% share of the fragmented market, and is first in the narrower market for construction certificates, according to research cited in the prospectus.

Between 2022 and 2024, Hiducation’s revenue grew by about 28%, from 400 million yuan to 510.5 million yuan, while its losses declined by half from 185.7 million yuan in 2022 to 90.7 million yuan. It had a total learner base of 4.3 million paying users in June this year.

But those positive trends abruptly reversed this year, with revenue declining by 5.5% year-on-year in the first half of 2025 to 231.6 million yuan, and the company’s loss more than doubling to 158.3 million yuan. Its one consistently rising metric was its gross margin, which grew from 78.6% in 2022 to 81.6% in 2024, and rose further to 85.8% in the first half of 2025.

Since almost two-thirds of Hiducation’s revenue comes from its construction-related professional qualification examination courses under the Haixue and Jingjin brands, it’s easy to conclude that ongoing sluggishness in the property market is to blame for the company’s recent downturn. The share of revenue from its construction industry training and qualification services fell from 68.2% in 2022 to 59.5% in the first six months of 2025.

So, why does Hiducation think investors will buy into its IPO now, given its recent slump that’s hardly likely to excite anyone? One answer is AI deployment in the sector, which the company believes will help to improve its performance. Hiducation began exploring large-model AI applications in 2024 and established an independent AI innovation team in 2025, launching more than 30 AI agents over the next six months.

Hiducation is also testing an AI-powered teaching assistant with a function that has supported the grading of more than 13,000 assignments since its launch in September 2024. An AI-powered marketing assistant, launched in August 2025, has supported the analysis of more than 100,000 business opportunities, according to the prospectus. And a membership product launched in May 2025 as a pilot has already acquired 21,000 paying users.

Another reason for hope is Hiducation’s recent moves beyond the construction sector, including into emergency safety, accounting and finance, legal credentials and healthcare.

The bulk of Hiducation’s business comes from its Haixue and Jingjin brands, whose revenue rose from 378.9 million yuan in 2022 to 482.4 million yuan in 2024. Business services under the ShuPeiTong brand contributed 21 million yuan in 2022, but their contribution has fallen from 5.3% of total revenue that year to just 1.8% of in the first half of this year.

By industry, construction-related consumer services accounted for 60.9% of revenue, or 138.5 million yuan, in the first half of this year, while emergency safety training made up 21.6% and “other” qualification examination courses accounted for the rest. Emergency services qualification exams look like the company’s most important growth engine, rising from 13.3% of revenue in 2022 to 21.6% in the first half of this year.

Hiducation plans to use IPO proceeds to upgrade its construction and emergency safety courses, to expand in medical and healthcare, the silver economy and new energy, and to build services for lifelong learning. The largest share will go to AI infrastructure, data collection and research – areas that looks potentially promising, but may also require closer investor scrutiny to determine the true extent to which they can improve its efficiency.

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