The “dark horse” of the education sector, China Oriental Education (00667) is still looking at high school for a long time

Making great strides along the way, ignoring the “tariff war” fears, China Oriental Education (00667) seems to be booming this year, with a cumulative increase of 90% in stock prices, outperforming the vocational education sector by more than 85 percentage points.

However, looking at the extended cycle, after reaching a high point in 2021, the company's market capitalization fell rapidly due to sector and policy effects. It bottomed out in 2024, and shrunk by more than 90% during this period. The investment environment and sector trends were good in 2025, which led to a continuous rise in the company's market value. Furthermore, the company's performance has not been stable in recent years, but there was a marked improvement in 2024. In particular, profitability was greatly improved.

The Zhitong Finance App learned that China Oriental Education's 2024 financial report shows that it achieved annual revenue of 4.116 billion yuan, up 3.5% year on year, gross profit of 2.115 billion yuan, up 10.8% year on year, shareholders' net profit of 513 million yuan, up 88% year on year, and gross margin and net interest rate increased to 51.38% and 12.46% respectively. Furthermore, the company plans to pay a final dividend of HK$0.22 per share, with a dividend payment ratio of 93.5% and a dividend ratio of nearly 4%.

Obviously, the company's performance and valuation are linked, so after the sharp rise in stock prices this year, will China Oriental Education still have a chance?

Steady increase in performance and significant increase in profit

China Oriental Education is the leading vocational training target in Hong Kong stocks. The main difference between this and academic vocational education is that the study cycle is relatively shorter, income recognition frequency is higher, majors are more targeted, and the employment rate is relatively high. The company owns five training brands, including New Oriental, Omic, Xinhua Computer, Wantong, and Aumandi. The average employment rate of these five brands reached 94.9% in 2024.

In 2024, the revenue contributions of New Oriental, Omic, Wantong, and Ormandy were 46.6%, 8.3%, 18.54%, 22.2%, and 2.56% respectively. All brands continued to grow during this period. Among them, the revenue of the Ormandi brand increased by more than 120%. This was mainly driven by “volume and price”. The average tuition fees and number of trainees for the company's brands all increased to varying degrees. The overall average tuition fee was 27,600 yuan, an increase of 3.6%, and the number of trainees was about 146,300, a slight increase of 0.4% over the previous year.

Photo Source: Company Financial Report

Specifically, New Oriental teaches cooking techniques, Omic teaches Western food, Xinhua Computer teaches information technology, Wantong trains car repair machines, and Ormandy trains fashion and beauty industry. In terms of the learning cycle, apart from Omiki, the other four major brands focus on long-term courses (more than one year) training. In terms of the average number of trainees and long-term course training, New Oriental 87%, Xinhua Computer 95%, Wantong 93%, and Aumandi 78%.

In terms of fees, the fees for long-term courses are high. The average fee for long-term courses of the five major brands exceeds 20,000 yuan. In the case of New Oriental, the 2024 course fees range from 294-180,000 yuan, while short-term courses range from 500 yuan to 78,800 yuan, which is a large span. In addition, Omega has the highest initial fee, starting at 42,000 yuan for long-term courses. However, the brand mainly focuses on short-term courses, accounting for 70% of the average number of trainers, and the fee for short-term courses is 800 yuan to 39,000 yuan.

China Oriental Education's brands have leading advantages, especially New Oriental Cooking, which has become a benchmark in the industry and has high pricing capacity, keeping profit margins on the rise. In terms of gross margin, in 2024, New Oriental, Omic, Xinhua Computer, Wantong and Ormandy were 54.3%, 56%, 51.1%, 50% and 54.6% respectively, up 4.5, 8, 1.9, 1.1 and 28 percentage points, respectively. The overall gross profit margin was 51.4%, up 3.4 percentage points year on year.

Expenses are also being continuously optimized. In 2024, the company's sales expense ratio, administrative fee rate and financing fee ratio were 23.66%, 12.34%, and 2.87%, respectively, down 2.4, 13.72 and 0.63 percentage points from the previous year, respectively. The overall fee rate for the period was 38.87%, down 16.75 percentage points from the previous year. Thanks to comprehensive optimization of gross profit and expenses, the company's adjusted EBITDA profit was 1.376 billion yuan, up 21.3% year over year, profit margin increased to 33.43%, shareholders' net profit increased 88%, and net interest rate increased to 12.46%.

The “dark horse” of the education sector remains optimistic about the high frontline in the long term

From an industry perspective, in 2022, China's vocational education and training market has exceeded trillion yuan and maintained a steady growth rate. The vocational training industry is growing at a compound growth rate in units. The growth rate of vocational education is higher, but it has a certain complementary effect with vocational training. Against the backdrop of high unemployment, ordinary jobs are saturated, and more specialized positions still have a talent gap, and vocational training has ushered in a new round of opportunities.

In fact, whether it is vocational training or vocational education, the capital market is quite sensitive to policies, and trends are consistent, and risks and opportunities are the same. In the Hong Kong stock market, China Oriental Education is a scarce target for vocational training and is unique among industry leaders. In comparison, there are many vocational education targets, including more than 20 companies including China Education Holdings, New Higher Education Group, and Zhonghui Group.

Due to differences in study cycles, tuition fees, and income recognition, etc., there are differences in the accounting cycle and profit margins of the vocational training and education sectors. However, overall, vocational education revenue stability is higher and profit margins are higher. Taking the 2024 fiscal year as an example, Xinhuiao and Zhonghui Group both maintained double-digit revenue growth, with net interest rates of more than 30%, which is more than 17 percentage points higher than China Oriental Education.

It is worth mentioning that in 2024, the vocational education and training sector bottomed out, and China Oriental Education stood out. There are three main points: first, it is a scarce target in the vocational training sector and received more attention; second, driven by volume and price, the company's profitability increased rapidly, and fundamentals exceeded expectations; and third, the company implemented a high dividend distribution policy for a long time and was favored by long-term investors.

According to Oriental Choice data, the company has accumulated 34 dividends since 2000, and dividends have not been interrupted even during the pandemic. The cumulative dividends have reached 8.51 billion yuan, which is equivalent to 79% of the current market value, and the dividend ratio in 2024 exceeds 90%. The company's dividend policy shows that in the absence of unforeseen circumstances, dividends approved by the board of directors to be distributed to shareholders in cash for the years up to 2025, 2026 and 2027 will account for no less than 60% of the net profit due to shareholders for that year.

Overall, China Oriental Education's performance increased steadily in 2024, and its profitability increased dramatically, and it has become a “dark horse” in the education sector in 2025. However, the current valuation is too high. The PB value and PE value are 1.8 times and 20.4 times, respectively, while the vocational education sector is 0.4 times and 5.1 times respectively. The short-term profit market withdrawal may cause the valuation to retreat. In the long run, as the valuation of the vocational education sector is repaired, the company benefits from the sector's drive and can still be optimistic.