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China YuHua Education Corp Ltd 06169

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Stock XHKG Rating as of
HKD 0.45 −0.04 (8.16%)
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Company Report

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China YuHua Education Earnings: Disappointing Capex and Margin Slide; Risk of Dilution Remains High

Cheng Wang

China YuHua Education’s fiscal first-half 2024 results are disappointing. Capital expenditure remained high at 1.4 times of its interim revenue, and gross margin fell by 12.5 percentage points to 34.4% because of higher depreciation and staff costs. After adjusting our margin and capex assumptions, we cut our fair value estimate to HKD 0.80 per share from HKD 1.50. YuHua’s shares fell 4% ahead of the result release, and we think further negative reaction may persist in the near term. We see risk to our fair value estimate from possible dilution as YuHua extends its convertible-bond repayment.

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Price vs Fair Value

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06169 is trading at a 44% discount.
Price
HKD 0.45
Fair Value
HKD 4.60
Uncertainty
Very High
1-Star Price
HKD 2.70
5-Star Price
HKD 1.70
Economic Moat
Mptnqt
Capital Allocation
Yfjnrhj

Bulls Say, Bears Say

Bulls

Negative sentiment toward the education sector eases; there are no further regulatory actions.

Bears

Growth will slow in the absence of acquisitions.

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Trading Information

Previous Close Price
HKD 0.49
Day Range
HKD 0.45–0.51
52-Week Range
HKD 0.38–1.21
Bid/Ask
HKD 0.45 / HKD 0.46
Market Cap
HKD 1.62 Bil
Volume/Avg
38.7 Mil / 9.6 Mil

Key Statistics

Price/Earnings (Normalized)
1.98
Price/Sales
0.71
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

China YuHua Education is a leading private education provider based in Henan, China. It currently offers higher education and secondary education after the deconsolidation of K-9 schools in 2021. YuHua operates 10 schools across mainland China and overseas as of August 2023. Total enrolled students reached 125,631 as of February 2023, ranking fourth among listed private higher education providers in China.
Sector
Consumer Defensive
Industry
Education & Training Services
Stock Style Box
Small Value
Total Number of Employees
8,125
Website
http://www.yuhuachina.com

Competitors

Valuation

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Metric
06169
00839
00667
Price/Earnings (Normalized)
 1.985.7018.95
Price/Book Value
 0.220.730.88
Price/Sales
 0.711.801.25
Price/Cash Flow
 1.464.066.68
Price/Earnings
06169
00839
00667

Financial Strength

Metric
06169
00839
00667
Quick Ratio
 0.770.761.57
Current Ratio
 0.770.851.70
Interest Coverage
 31.574.163.47
Quick Ratio
06169
00839
00667

Profitability

Metric
06169
00839
00667
Return on Assets (Normalized)
 8.51%5.49%3.01%
Return on Equity (Normalized)
 15.38%12.83%5.02%
Return on Invested Capital (Normalized)
 11.37%8.69%4.25%
Return on Assets
06169
00839
00667
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Education & Training Services Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NWOEF
New Oriental Education & Technology Group Inc Ordinary Shares—Gnkzj$13.5 Bil
EDU
New Oriental Education & Technology Group Inc ADRPgvydsrCpxb$13.5 Bil
TAL
TAL Education Group ADRGjqqTbyg$8.4 Bil
LOPE
Grand Canyon Education Inc—Wnxzrn$4.1 Bil
GHC
Graham Holdings CoTlzzrmtrtTlwfk$3.3 Bil
LRN
Stride Inc—Wzj$3.0 Bil
STRA
Strategic Education IncCkmknklpThsz$3.0 Bil
LAUR
Laureate Education Inc Shs—Kqbk$2.3 Bil
ATGE
Adtalem Global Education IncFfjzdkwHvj$2.3 Bil
GOTU
Gaotu Techedu Inc ADR—Zwmq$1.8 Bil

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