The Zhitong Finance App learned that Guosheng Securities released a research report stating that China Oriental Education (00667)'s net profit for 2026-2028 is expected to be 9.1/10.4/1.19 billion yuan each, +20.0%/+15.0%/+14.1%, corresponding to PE of 7.8/6.8/5.9X, which was first covered to give a “buy” rating; the bank believes that as a leader in vocational skills training, the optimization of the enrollment structure will drive a steady recovery in fundamentals and continuous restoration of profitability.
Guosheng Securities's main views are as follows:
Company Overview: Deeply involved in vocational education for more than 30 years, and performance has steadily rebounded
The company was founded in 1988 in Hefei, Anhui, and owns seven major brands including New Oriental Cooking, Xinhua Computer, and Wantong Auto. As of 26H1, the company operated 233 colleges. Revenue growth accelerated, and profit continued to recover: 2025 revenue of 4.62 billion yuan/year over year, net profit of 760 million yuan/year on year +47.5%; 26H1 revenue of 2.42 billion yuan/year on year +10.6%; net profit to mother of 460 million yuan/year on year +13.0%. Light leverage+strong cash flow, impressive dividends. Excluding contract liabilities, the 2025/26H1 balance ratio is 27.7%/26.5%, and operating cash flow/operating income (TTM) is 33.7%/32.1% each; emphasis is placed on shareholder returns, the dividend payment ratio is maintained above 50% year-round, and it is promised that the 2025-2027 dividend ratio will not be less than 60%.
Industry: Driven by both policy and demand, broad market space
1) China's skills training market will expand from about 200 billion yuan in 2020 to 850 billion yuan in 2024, and is expected to exceed 2 trillion yuan in 2029. On the policy side, vocational education has been upgraded to a strategic project for an educational powerhouse and a talent powerhouse. In the context of Pugao recruitment expansion, industry supply is being cleared at an accelerated pace, and high-quality leaders are expected to gain more market space. 2) On the demand side, the 15-17 age group is still at its peak; there is a significant structural mismatch in the job market, and demand for blue-collar and life service jobs is growing.
Competitive advantage: Multi-brand card boom track, optimized enrollment structure to reshape growth momentum
1) Diversified business coverage, recovery in enrollment, and improvement of the academic structure. The company's brands cover booming circuits such as cooking, IT, auto repair, beauty, etc., and lay out new service consumption fields such as pet care and health care; the number of new trainees in 2025/26H1 was 15.1/89,000, +5.5%/6.8%. Among them, the number of new 1-2 year students enrolled was +66.2%/48.6%, and the academic structure continued to be optimized.
2) Cooking stabilized, the beauty industry accelerated, and the second curve gradually took shape. The revenue of the cooking business in 2025 was 2.14 billion yuan/+11.6%, and the gross profit margin was 59.0%, the highest since 2020; the fashion and beauty industry's 2025/26H1 revenue was 1.8/120 million yuan each, +71.7%/50.7% YoY, with a gross profit margin of 63.0%/64.0% being the highest in all sectors.
3) Strong teaching strength and deep resources for the integration of industry and education. The company is one of the first batch of third-party evaluation agencies for vocational skill rating certification in the country. It has deep school-enterprise cooperation with leading companies such as BYD and Midea. The employment rate of all 26H1 brands has reached over 92%, and the high employment rate supports the increase in tuition fees year by year.
4) The vocational education industrial park strategy helps reduce costs and increase efficiency. Since 2023, the company has shut down and converted inefficient campuses and promoted the construction of vocational education industrial parks. The first phase of industrial parks in Sichuan, Shandong, Guizhou, Henan and Jiangsu has been put into operation one after another. Reuse of resources and improved human efficiency have promoted the continuous restoration of profitability, and actively explored international cooperation and overseas trade in vocational education.
Risk Alerts
Enrollment falls short of expectations, industry competition increases the risk, education policy changes risk, new business growth falls short of expectations, and risk of changes in downstream industry sentiment.