This year’s report from China Education Group Holdings Limited (CEG) is different when it comes to money. The author of this piece writes a lot about CEG’s journey and looks at both problems and signs of hope.
China Education Group: A Story of Gains and Losses:
CEG, China’s biggest privately owned education group, saw its sales drop by a strange 25.2% at the end of the fiscal year in August. Its sales went up by 18.1% last year, to 5.62 billion yuan ($793 million). A big trust loss worth 390 million yuan meant that less money was made. It had to do with one of its trade schools.
China Education Group: Yu Guo and Xie Ketao started CEG in 1999:
They have plans for growth and mergers and acquisitions (M&A). A university in Guangdong and a university in Jiangxi had already been set up. They joined forces in 2017, which helped CEG grow. The business bought many more schools over the next few years. They bought about three trade and higher education schools each year from 2018 to 2020. CEG had bought 14 colleges in nine places in the US and 14 colleges in nine places around the world by 2021.
M&A helped CEG grow faster, but it also came with risks, as the 460 million yuan loss from goodwill impairment shows. They lost this money because they thought they would make less from a bought college because styles and tastes were changing.
Number of students stays the same Even though there were problems: CEG is strong because it is still growing, even though there are problems. It made 5.4 billion yuan more, or 18.2% more money. The main reason for this was that more people went to trade schools. It made 220 million yuan in international sales, 16.4% more than the previous year. It’s important to remember that more and more people are going to school, especially in trade schools. In the 2023–2024 school year, there will be 97,000 more full-time students.
China Education Group: trade Education Is Going Well:
One big reason CEG is going up is that China wants to put more focus on trade education. The company is able to offer more training thanks to a lot of help from the government. These shows will be about important things in the world right now, like virtual reality, smart manufacturing, and digital creation.
Find a middle ground between market doubt and promise: In China, the market for vocational education has a lot of promise. However, the market reacted badly when CEG lost trust, which shows that people are generally wary in this policy-sensitive field. P/E shows that CEG is more expensive than Hope Education (1765.HK) and China New Higher Education Group (2001.HK). It is 7.2 times higher than Hope Education and 4.3 times higher than China New Higher Education Group. Even though the market went down, this is still true.
Long-term goals and plans for the future:
CEG, the largest private college in China, is still pleased with its future. The company has set up 372 majors for college students and places a lot of importance on the “integration of industry and education.” This shows that the government supports the business’s plan to teach job-related skills. The company is ready to change with the times when it comes to next-generation IT, CNC machine tools, robots, and other important things.
We still have doubts, but China Education Group’s unwavering dedication to technical education and steady student growth give us reason to hope. Some investors are very interested in how CEG plans to move forward and how well it can change to a changing market as it navigates China’s complicated education system. They are looking for signs that they might be able to come back.