South China Vocational Education Group Company Limited (SCVE GROUP) released its unaudited 2026 interim results for the six months ended 30 June 2026, highlighting resilient top-line growth but a sharp contraction in bottom-line profitability.
Revenue and Operations • Group revenue advanced 6.9% to RMB 386.57 million, driven by increased tuition and boarding fees as full-time student enrolment reached 37,191 for the 2025/26 academic year. • Average tuition per student stood at RMB 19,755 for Lingnan Institute of Technology and RMB 16,109 for Lingnan Modern Technician College; corresponding average boarding fees were RMB 2,630 and RMB 2,412 respectively.
Profitability • Cost of sales climbed 7.9% to RMB 257.67 million on higher staff expenses, depreciation charges and campus maintenance, compressing gross margin to 33.3% from 34.0%. • Gross profit increased 4.8% to RMB 128.90 million, but a surge in other expenses—primarily tax payments and surcharges—drove total operating costs higher. • Finance costs rose 23.5% to RMB 6.03 million, reflecting a larger average debt load. • Income tax expense of RMB 21.05 million versus a small tax credit a year earlier further weighed on earnings. • Consequently, net profit declined 30.8% to RMB 57.96 million.
Balance Sheet and Liquidity • Cash and cash equivalents more than halved to RMB 230.29 million, largely due to settlement of prior-year tax liabilities. • Interest-bearing bank and other borrowings increased to RMB 421.94 million; the gearing ratio rose to 26.1% from 24.3% at year-end 2025. • Net current liabilities narrowed to RMB 211.10 million from RMB 275.81 million, aided by a RMB 228.90 million reduction in contract liabilities as tuition and boarding fees were recognised. • All HK$446.00 million in IPO proceeds have now been fully deployed, mainly for campus expansion and acquisitions.
Strategic Priorities and Outlook Management plans to: 1. Pursue high-quality development of academic vocational education, aiming to elevate Lingnan Institute of Technology to vocational-university status and expand Lingnan Modern Technician College through industry-college collaborations. 2. Deepen artificial-intelligence initiatives via a newly established Applied Education Research Institute, focusing on AI talent training, incubation and proprietary software/hardware development. 3. Accelerate regional expansion in the Greater Bay Area through mergers, acquisitions and industry-education integration hubs. 4. Broaden ancillary education, including vocational skill certification and adult continuing-education services across Guangdong Province. 5. Strengthen international collaborations and cultivate a multi-sector “five-in-one” growth model spanning training, talent dispatch, health, e-commerce and public welfare.
Dividend and Corporate Actions • The Board did not declare an interim dividend (1H 2025: HK 2.0 cents per share). • On 26 August 2026, the company resolved to change its financial year-end from 31 December to 31 August to align reporting with the academic calendar.
Governance and Compliance • The company reported full compliance with Hong Kong’s Corporate Governance Code and noted no material contingent liabilities or significant post-period events beyond the year-end change. • Outstanding related-party transactions totalled RMB 8.35 million receivable and RMB 0.26 million payable as of 30 June 2026.
Despite revenue momentum, SCVE GROUP faces profitability pressure from rising costs and new tax assessments. Management remains focused on capacity expansion, AI-driven education offerings and strategic acquisitions to support long-term growth in China’s rapidly evolving vocational education sector.