China East Education Earnings: Cost Reduction Efforts Drove Margin Expansion

China East’s 2024 results exceeded our expectations, with net income rising by 88% year on year to CNY 513 million, helped by gross margin expansion amid cost reduction initiatives. While maintaining our revenue forecasts, we have increased our net income estimates by 13%-29% for 2025-28, after factoring in reduced cost assumptions. This has resulted in an 11% increase in our fair value estimate to HKD 4.73. China East's share price has more than doubled from its January low and is now 2% above our revised valuation. We recommend that investors wait for a better entry point.