SCHOLAR EDU (01769) has announced that the board expects the group to record a net profit attributable to company owners of not less than RMB 12 million for the six months ending June 30, 2026. This compares to a profit attributable to owners of RMB 62.9 million for the same period ended June 30, 2025.

After excluding share-based compensation expenses, the group anticipates an adjusted net profit attributable to owners, a non-IFRS measure, of not less than RMB 22 million. This is against an adjusted profit of RMB 81.3 million for the six months ended June 30, 2025.

The anticipated decrease in both the reported and adjusted profits for the first half of 2026 is primarily attributed to certain new literacy learning centers. The initial operational ramp-up and the time required for market penetration for these centers have been longer than expected.

Consequently, the revenue generated by these centers in their early stages remains relatively limited. Meanwhile, direct operating costs, including staff expenses and benefits, amortization, depreciation, utilities, and property management fees, remain high relative to the revenue produced. This situation has negatively impacted the group's overall profitability.