Shanghai Gench Education (1525.HK) Q4 2024 Earnings Report

QQ4 2024 for Shanghai Gench Education Group Limited (1525.HK) delivered a stable top line with meaningful cash generation and a solid balance sheet, even as year-over-year profitability faced pressure from higher operating costs. Revenue registered 217,210,000 CNY for the quarter, with gross profit of 104,530,500 CNY and a gross margin of 48.12%. Net income came in at 21,880,500 CNY and diluted EPS was 0.0554 CNY. While QoQ metrics were flat to modestly higher, YoY figures show a broader margin compression (net income down 56.2% YoY and operating income down ~60% YoY), underscoring the impact of expense dynamics on quarterly profitability.

The company generated robust operating cash flow of 275,609,500 CNY and free cash flow of 239,717,500 CNY in the quarter, underscoring strong cash-generation capacity that supports capex, debt management, and potential strategic investments. The balance sheet remains solid, with total assets of 3,975,262,000 CNY and total stockholders’ equity of 2,317,130,000 CNY, but liquidity metrics show a current ratio of approximately 0.85, indicating near-term liquidity sensitivity if operating conditions weaken. Debt levels are sizable (total debt 832,558,000 CNY; net debt reported at 502,159,000 CNY in the data), but the company carries substantial liquidity from cash and short-term investments (803,567,000 CNY) and long-duration investments, contributing to a balanced financial position.

Valuation appears modest relative to earnings (P/E around 12.3x) and more attractive on a price-to-book basis (approximately 0.47x), suggesting potential upside if enrollment trends improve and regulatory risk remains contained. Management commentary from the earnings call is not included in the provided transcript dataset; as such, the forward narrative relies on the disclosed financials, sector dynamics, and peer comparisons to form the investment thesis.