China Xinhua Education (02779) posted flat top-line growth but lower earnings for the six months ended 30 June 2026 as cost pressures eroded margins.

Revenue and Margins • Revenue rose 0.6% year on year to RMB 364.81 million, driven mainly by higher average tuition fees. • Gross profit fell 18.3% to RMB 193.48 million; gross margin contracted to 53.1% from 65.3% a year earlier, reflecting a 36.2% surge in cost of sales to RMB 171.33 million, largely attributable to increased teaching staff expenses.

Earnings Performance • Profit for the period declined 7.1% to RMB 238.01 million. • Adjusted net profit, which excludes RMB 40.37 million of foreign-exchange gains and RMB 0.67 million of share-based payment expenses, slid 17.9% to RMB 198.31 million. • Basic and diluted EPS dropped to RMB 0.148 from RMB 0.159 in H1 2025. • Other income contracted 25.3% to RMB 36.12 million owing to lower rental, property-management and service income. • Finance costs eased 15.8% to RMB 5.40 million on reduced borrowings and lower interest rates.

Balance Sheet and Liquidity • Cash, bank balances and long-term deposits totalled RMB 903.46 million at 30 June 2026. • Net current assets improved 66.7% to RMB 575.31 million, supported by a RMB 357.09 million reduction in contract liabilities. • Total borrowings stood at RMB 516.50 million, including a RMB 458.62 million loan from related party Wu Junbao Company Limited at an annual 2.0% rate. • Debt-to-asset ratio fell to 14% from 21% at year-end 2025. • Capital expenditure was RMB 21.30 million versus RMB 49.20 million a year earlier. • No interim dividend was declared.

Operational Metrics • Full-time student enrolment reached approximately 43,221 for the 2025/26 academic year, up 0.48% year on year. • The group secured four additional national-level first-class undergraduate programmes and 14 provincial-level counterparts, enhancing its academic portfolio.

Strategic Priorities Management plans to: 1. Pursue “Double Excellence” application-oriented university initiatives under China’s 15th Five-Year Education Plan, including a bid for master’s degree–conferring status. 2. Deepen industry-education integration with new engineering, medical and liberal arts disciplines, and expand school-enterprise cooperation. 3. Strengthen faculty recruitment, emphasising high-level and “dual-qualified” talent. 4. Accelerate digital-campus development and integrate AI across teaching and administration. 5. Broaden international partnerships and Sino-foreign cooperative programmes.

Audit and Governance Rongcheng (Hong Kong) CPA Limited was appointed auditor following KPMG’s retirement at the June 2026 AGM. The company affirmed full compliance with Hong Kong’s Corporate Governance Code and reported no post-balance-sheet events or off-balance-sheet commitments.

With stable enrolment and a strengthened balance sheet, China Xinhua Education enters the second half focused on cost discipline and academic upgrading to drive sustainable growth.