On November 28, CHINA CHUNLAI (01969) released its annual financial report for the fiscal year ending August 31, 2025. Despite macroeconomic challenges and structural adjustments in the education sector, the company delivered steady growth in both revenue and profit, demonstrating strong internal growth momentum and operational efficiency.

During the period, CHINA CHUNLAI achieved revenue of RMB 1.791 billion, a 9.8% year-on-year increase, while net profit rose 7.4% to RMB 836 million. Earnings per share (EPS) for FY2025 reached RMB 0.7, up RMB 0.05 year-on-year, reflecting tangible value creation for shareholders. The report highlights how the company expanded revenue while enhancing profitability through meticulous management, ultimately translating growth into shareholder value.

**Robust Revenue Growth and Profitability Highlight Competitive Edge** CHINA CHUNLAI’s 9.8% revenue growth places it among the steady performers in Hong Kong’s higher education sector. However, its standout metric is its impressive net profit margin of 46.7%, ranking among the highest in China’s private education industry. Unlike peers reliant on capital-intensive mergers and acquisitions, CHINA CHUNLAI’s strong internal profitability and cost control generate ample cash flow to support future growth, mitigate risks, and reward shareholders.

A breakdown of revenue reveals sustainable growth drivers: tuition fees rose 10.1% to RMB 1.636 billion, accounting for 91.4% of total revenue, while accommodation fees grew 6.3% to RMB 154 million. The tuition-driven model underscores the company’s reliance on education services’ market competitiveness and stable demand. The parallel growth in accommodation fees further confirms an expanding student base and operational synergies.

**Dual Growth Engines: Enrollment and Tuition Fees** The 10.1% tuition growth stems from both enrollment expansion and higher per-student fees. Student numbers increased 6.4% to nearly 110,000, solidifying CHINA CHUNLAI’s position as a top-tier private education provider. This scale ensures stable cash flow and operational efficiencies, bolstering its high margins and resilience to market fluctuations.

Meanwhile, average annual tuition rose 3.7% to approximately RMB 16,000, reflecting strategic advantages: 1. **Affordability Edge**: Compared to elite private institutions in major cities (where tuition exceeds RMB 30,000), CHINA CHUNLAI’s accessible pricing strengthens its penetration in central and lower-tier cities, avoiding cutthroat competition in premium segments. 2. **Pricing Potential**: With room to raise fees as educational quality, brand reputation, and graduate outcomes improve, the company has a clear path for sustainable revenue growth.

**Operational Excellence and Cost Control** Despite enrollment growth, administrative and marketing expenses were well-contained, demonstrating operational leverage. This ability to scale without proportionally increasing costs underpins its high net margins.

**Strategic Investments for Long-Term Value** CHINA CHUNLAI’s FY2025 strategy balances growth with financial optimization. While revenue costs surged 21.3% (outpacing revenue growth), this reflects deliberate investments in talent and infrastructure to strengthen long-term competitiveness. Key initiatives include: - **Higher Salaries**: Attracting top-tier faculty to enhance educational quality and brand equity. - **Expansion Support**: Preparing for new campuses and student intake. - **Efficiency Gains**: Incentivizing staff to boost productivity.

Though these investments temporarily pressured margins, they position the company for stronger enrollment appeal, graduate employability, and pricing power.

**Strengthened Financial Position** 1. **Robust Cash Flow**: Operating cash flow remained strong, with cash reserves rising to RMB 832 million from RMB 791 million, fully covering strategic outlays. 2. **Improved Leverage**: The debt-to-equity ratio dropped sharply from 57.9% to 42.5%, reducing financing costs by 34.2% to RMB 63 million and enhancing financial stability. 3. **Liquidity Boost**: Net current assets turned positive at RMB 164 million, driven by healthier receivables and lower short-term liabilities.

**Outlook** With its Nanjing campus operational since September 2025 and continued investments in faculty, technology (e.g., DeepSeek R1 AI integration), and regional expansion, CHINA CHUNLAI is poised to extend its leadership in China’s evolving private education sector. Its disciplined growth strategy, profitability, and financial resilience present a compelling value proposition for investors.