China New Higher Education Group (SEHK:2001): Net Profit Margin Hits 31.9%, Reinforcing Quality Earnings Narrative

China New Higher Education Group (SEHK:2001) just reported its first-half FY 2025 financial results, posting revenue of ¥1.41 billion and basic EPS of ¥0.30, with net income (excluding extra items) coming in at ¥469 million. Looking at recent trends, the company has seen revenue move from ¥1.31 billion in the first half of FY 2024 to ¥1.10 billion in the second half of FY 2024, before climbing back to ¥1.41 billion most recently. Net income over the same periods was ¥432 million, then ¥324 million, and now ¥469 million, with EPS tracking upwards in tandem. Margins continue to stand out as a key story for investors, underscoring the company’s sustained profitability in the latest release.

See our full analysis for China New Higher Education Group.

Next, we will see how these headline results line up with the dominant narratives and expectations. Sometimes they confirm the story, and sometimes they shake things up.

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Net Profit Margin Tops 31.9%, Again

• The latest net profit margin reached 31.9%, up from last year’s 31.4%. This indicates that even as other companies face cost pressures, China New Higher Education Group continues to convert more of its revenue into actual profit compared to previous periods.
• Analysts’ consensus view identifies margin durability as a sign of high-quality earnings, while noting that future margin gains may be harder to sustain. Revenue growth, forecast at 7.6% per year, currently trails broader Hong Kong market expectations of 8.5% per year.
  • Consensus observes the company’s ability to surpass its own historical margins, but also points out the risk that slower sector growth could gradually reduce profitability compared to industry peers.
  • The steady margin supports those highlighting strong fundamentals, yet it may raise questions for anyone expecting rapid margin expansion as the primary driver of future gains.
• To see if margin strength shapes the outlook, read the full consensus view for China New Higher Education Group. 📊 Read the full China New Higher Education Group Consensus Narrative.

Valuation Well Below DCF Fair Value

• The company’s current share price of 1.11 CNY is approximately 79.8% below its DCF fair value estimate of 5.49 CNY. It also trades well below the Hong Kong Consumer Services industry average price-to-earnings ratio at 2.4x versus 7.3x.
• This significant discount supports a value case, suggesting that investors may be factoring in elevated risks or uncertainty, despite above-average profit margins and annualized earnings growth of 9.7%.
  • The differing P/E multiples reflect the market’s caution. For value-focused investors, this could represent a rare opportunity to access solid profit at a substantial market discount.
  • Some of this low price is likely related to recent share price volatility and minor equity dilution, which may remain important factors for those monitoring shareholder returns and sentiment.

Earnings Growth Slowing, but Outpaces Sector Peers

• Earnings have grown by 9.7% over the last year, a solid figure though lower than the company’s five-year average of 12.5% per year, and above the projected 5.2% annual growth ahead.
• Supporters of the company note that, while growth is moderating, the track record remains stronger than many peers, and steady forecasts suggest the market could be undervaluing both resilience and long-term positioning.
  • Those with a favorable outlook emphasize that, despite slower growth, margin leadership and consistent past performance support confidence in the business model’s durability.
  • Interestingly, compared to the broader Hong Kong market’s more cyclical earnings, China New Higher Education Group maintains steadier expansion even as overall market growth rates trend higher.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on China New Higher Education Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Although profit margins remain robust, China New Higher Education Group’s earnings growth is slowing and now trails both its own history and broader market trends.

If you want to focus on companies with steadier track records and more reliable expansion ahead, find those standout performers through our stable growth stocks screener (2075 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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