Orient Securities has released a research report, initiating coverage on CHINA EAST EDU (00667) with a "Buy" rating and a target price of HK$6.64. The target price, based on an exchange rate of HK$1 = RMB 0.8726, corresponds to a price-to-earnings (P/E) ratio of 13 times for the year 2026. The report forecasts the company's net profit attributable to shareholders for 2026-2028 to be RMB 9.87 billion, RMB 11.62 billion, and RMB 13.67 billion, respectively. This outlook is based on the company's solid student base, rising average revenue per student driven by the expansion of longer-duration programs, its employment-oriented industry-education integration system, and the operational advantages of its regional centers.
The core arguments from Orient Securities are as follows:
The company's employment-oriented industry-education integration system is difficult to replicate, and its high-quality employment outcomes form a core competitive moat. CHINA EAST EDU has established deep partnerships with over 30,000 enterprises, co-building training bases and industry colleges. Its core barrier lies not only in an employment rate exceeding 95% but also in high-quality employment results that significantly lead the industry across multiple dimensions, including starting salaries, job-major alignment, and employment stability. This verifiable employment quality is the fundamental source of its brand reputation, student attraction, and tuition pricing power, constituting a core competitive advantage that is hard to duplicate.
The student structure focuses on "vocational school graduates," opening new growth avenues despite general high school expansion. While market concerns exist about general high school expansion squeezing the student pool, the company's core customer group is not the marginal students competing for general high school slots. Instead, it targets the steadily growing segment of "vocational school graduates" who have a clear employment orientation. The company has precisely launched high-value courses, such as the "15-month program," effectively meeting this large customer group's demand for "moderate duration, composite skills, and clear employment prospects," thereby opening new growth space.
The deepening long-duration program strategy optimizes the profit model, leading to a definitive improvement in financial quality. The company continues to advance its curriculum system towards longer-duration programs. The proportion of students enrolled in long-duration programs within its core segments remains stable above 90%, driving a significant increase in average revenue per student. The gross profit margin for 2025 increased by 2.91 percentage points year-on-year to 55.28%, and the contract liabilities balance reached a historical high. Revenue quality continues to improve, with the growth rationale gradually shifting from relying on student volume to deepening customer value.
A diversified brand portfolio solidifies the foundation, while forward-looking layouts in new sectors explore growth drivers. Brands under the company, such as New Oriental Cooking, Xinhua Computer, Wantong Automotive, and Omandi Beauty, cover essential sectors like culinary arts, IT, and automotive. Simultaneously, the company is incubating businesses in emerging fields like pet services and elderly care, forming a tiered business portfolio. Relying on a three-tier R&D system that achieves an annual professional program update rate exceeding 30%, it ensures its program offerings evolve in sync with industry demands, establishing a structural advantage from the supply side.
The regional center strategy drives educational upgrades and unlocks medium-to-long-term growth potential. The company has established large regional centers in locations like Anhui and Sichuan, with single-site capacity reaching up to 30,000 students, and is upgrading its schools to technician colleges. Regional centers not only enable intensive operations and cost reduction but also help the company break through bottlenecks in educational levels, enhancing brand credibility and student appeal.
Risk factors include intensified industry competition, slower-than-expected expansion of new businesses, and uncertainties related to policy implementation and execution.