Edvantage Group (SEHK:382) Net Profit Margin Drops to 25.8%, Challenging Quality Growth Narrative

Edvantage Group Holdings (SEHK:382) just reported its FY 2025 results, booking revenue of $1.2 billion and Basic EPS of 0.21 CNY for the latest half. Historically, the company has seen revenue move from $1.2 billion in the first half of 2024 to $1.2 billion in the latest period. EPS declined from 0.30 CNY to 0.21 CNY over the same span. Profit margins compressed in the period, reflecting some pressure on overall profitability.

See our full analysis for Edvantage Group Holdings.

Next, we will see how these headline numbers compare with the broader narratives that investors and analysts have been building around Edvantage Group Holdings.

Curious how numbers become stories that shape markets? Explore Community Narratives

Profit Margins Narrow to 25.8%

• Net profit margin decreased to 25.8% over the past year, down from 30.5% the previous year, highlighting a sustained squeeze on profitability.
• While the general market view praises Edvantage's 18.5% annual earnings growth over the last five years, the recent margin compression stands in contrast:
  • This year's negative earnings growth and a projected 2.3% annual decline in earnings over the next three years present a challenge to the company’s “high-quality growth” narrative.
  • The consensus narrative notes that even though Edvantage operates in a defensive education sector, today's profitability trends create new questions about earnings predictability.

Trading 84% Below DCF Fair Value

• Edvantage shares currently trade at a 2.6x Price-to-Earnings Ratio, far below the industry average of 7.2x, and at an 84.4% discount to the DCF fair value of 8.57 CNY compared to the current share price of 1.48 CNY.
• Although bears highlight the ongoing decline in earnings and margin pressure as justification for the discount, the valuation gap remains unusually wide:
  • Despite the projected earnings contraction, the pricing appears to anticipate more risk than analysts expect, which could limit further downside if sentiment stabilizes.
  • Critics note that the unstable dividend history may be a red flag, but the margin of safety provided by the deep discount to fair value stands out among Hong Kong education peers.

Revenue Growth Slower Than Market

• Revenue is forecast to rise by just 6.4% per year, lagging the Hong Kong market average of 8.5% annual revenue growth.
• General market analysis highlights that, while management has delivered consistent revenue improvements, the slower pace of growth compared to industry benchmarks could hold back a broader re-rating:
  • With trailing twelve-month revenue of $2.5 billion, the company remains sizable, but future growth upside is limited by both sector trends and cautious forward outlooks.
  • The current guidance supports a more conservative consensus that values predictability and capital discipline over breakout expansion.

See how the numbers stack up next to the consensus breakdown of where Edvantage is heading: 📊 Read the full Edvantage Group Holdings Consensus Narrative.

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 Edvantage Group Holdings'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

Edvantage has faced declining margins, slower revenue growth compared to the market, and weak earnings momentum, all of which make its outlook for sustainable expansion more challenging.

If you want to focus on names with consistent top and bottom line growth, use stable growth stocks screener (2075 results) and see how steady performers can provide more reliable returns.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com