South China Vocational Education Group Issues Profit Warning for FY2025

Key Highlights from the Announcement

• Significant Expected Loss for FY2025: South China Vocational Education Group Company Limited (the “Company”) has announced that it expects to record a loss attributable to owners of the Company of not less than RMB59.4 million for the financial year ending 31 December 2025 (FY2025). This is a dramatic reversal compared to a profit attributable to owners of approximately RMB90.9 million for the year ended 31 December 2024.
• Main Reason for the Loss: The anticipated loss is primarily due to the recognition of an under-provision of corporate income tax from prior years and the imposition of late payment surcharges. Additionally, the Company has made a relevant corporate income tax provision for the current year. These issues arose following a tax re-assessment initiated by the local tax authority during FY2025.
• Provisional Nature of Announcement: The figures are based on a preliminary assessment of unaudited consolidated management accounts and other information currently available to the Board. The results have not been audited or reviewed by the Company’s auditors or its audit committee.
• Final Results Pending: Investors and shareholders are advised that the actual results for FY2025 may differ from this announcement. The final financial information will be disclosed in the Company’s annual results announcement, expected by the end of March 2026.

Potentially Price-Sensitive Information for Shareholders

• Major Negative Earnings Swing: The transition from a profit of RMB90.9 million in FY2024 to a projected loss of at least RMB59.4 million in FY2025 is substantial and highly likely to impact investor sentiment and share price.
• Tax Re-assessment Risk: The loss is not from operational performance, but from a tax liability reassessed by local authorities, including significant late payment surcharges and current year provisions. This may raise concerns about the Company’s financial controls, governance, and future earnings visibility.
• Uncertainty Remains: As the numbers are preliminary and unaudited, there is further uncertainty regarding the final impact, which could result in additional volatility in the Company’s shares as the market digests new information leading up to the final results publication.

Additional Details

• The announcement was made in accordance with Rule 13.09(2)(a) of the Hong Kong Stock Exchange Listing Rules and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance.
• The Company urges shareholders and potential investors to exercise caution when dealing in the Company’s securities.
• The board comprises Mr. He Huishan (Chairman), Ms. He Huifen, and Mr. Lao Hansheng as executive Directors, and Ms. Yang Yang, Mr. Yeh Zhe-Wei, and Mr. Ma Shuchao as independent non-executive Directors.

Conclusion

The announcement of an expected significant loss for FY2025, driven primarily by a tax reassessment and associated penalties, marks a notable negative development for South China Vocational Education Group. The swing from a substantial profit to a considerable loss is a material event and is likely to influence market perception and share price volatility in the short to medium term. Investors are strongly advised to monitor subsequent disclosures, especially the final audited results, and to exercise caution in their investment decisions regarding the Company.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult a professional advisor before making any investment decisions. The information is based on preliminary and unaudited disclosures, which may be subject to change.

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