Macquarie: maintain outperform rating on CHINA EDU GROUP (00839) with a target price of 8.7 Hong Kong dollars.

Macquarie released a research report stating that they maintain a "outperform" rating on CHINA EDU GROUP (00839), with a target price of 8.7 Hong Kong dollars. The company expects a net profit of 429 million to 590 million yuan for the 2024 fiscal year (ending on August 31), indicating a net loss of 598 million to 768 million yuan in the second half of the year, which is lower than Macquarie's forecast and also a decrease from the 505 million yuan net profit in the second half of the 2023 fiscal year. CHINA EDU GROUP mentioned that the decrease in net profit was due to impairment losses of 1.68 billion to 1.75 billion yuan recorded during the period. The impairment losses for the 2024 fiscal year are expected to increase by 325-343% compared to the 2023 fiscal year, and Macquarie cannot rule out the possibility of more impairment losses. Additionally, the growth of full-time students was below expectations, and attention is on the details of the annual performance and whether dividends will be maintained.