Chen Lin Education Group Issues Profit Warning for Interim Period

Significant Reduction in Net Loss, but Interim Loss Expected

Chen Lin Education Group Holdings Limited (Stock Code: 1593) has issued a profit warning, alerting shareholders and potential investors to an anticipated unaudited net loss for the six months ended 28 February 2026. This announcement, made in compliance with Hong Kong Stock Exchange regulations, contains several key updates and disclosures that could be significant for the company’s share price.

Key Financial Highlights

• Expected Interim Net Loss: The Group is expected to record an unaudited net loss, with the net loss attributable to owners of the company not exceeding RMB24 million for the current interim period.
• Comparison to Previous Periods:
  • This is a substantial improvement compared to the net loss of RMB412 million reported for the financial year ended 31 August 2025.
  • However, it is a reversal from the unaudited net profit of approximately RMB4.6 million recorded in the six months ended 28 February 2025.

Reasons for the Change in Financial Performance

• Significant Reduction in Loss: The improved result (smaller net loss) compared to the previous financial year is primarily due to:
  • No Impairment Losses: The absence of the large non-cash impairment loss of approximately RMB288.8 million previously recognized in respect of goodwill and non-financial assets.
  • No Deferred Revenue Loss: The absence of a non-cash loss on restoration of deferred revenue of approximately RMB43.0 million.
• Interim Loss Causes: The net loss expected for the current period is mainly due to:
  • Increased Depreciation and Amortisation: Higher non-cash costs as infrastructure construction and equipment upgrades at the Group’s educational institutions neared completion.
  • Rising Operating Costs: Increased education and operation service costs and expenses, aimed at enhancing the quality of education services.

Other Noteworthy Financial Information

• Non-IFRS Net Profit: Despite the reported loss, the company expects its earnings before interest, taxes, depreciation, and amortization (EBITDA, i.e., non-IFRS net profit) to be approximately RMB90 million, indicating a positive underlying business performance.
• Financial Position: The company reports that its financial position and cash flow remain robust, with an optimized debt structure and declining finance costs.

Shareholder Alerts and Next Steps

• The interim results are still being finalized and have not been reviewed by the company’s audit committee, so figures are subject to potential adjustment.
• The official unaudited consolidated interim results are expected to be published by the end of April 2026.
• Shareholders and potential investors are advised to exercise caution when dealing in the shares of the company, as this profit warning and the publication of interim results could have a material impact on the share price.

Board Composition

As of the date of the announcement, the Board comprises Mr. Huang Yulin (Chairman), Mr. Wang Li, Ms. Gan Tian, and Ms. She Hui as executive Directors, and Mr. Sy Lai Yin, Sunny, Mr. Wang Donglin, and Mr. Qin Huimin as independent non-executive Directors.

Disclaimer: This article is based on preliminary unaudited financial information provided by Chen Lin Education Group Holdings Limited. Actual results may differ from estimates provided in this announcement. Investors should exercise caution and refer to the company’s forthcoming official interim results for more definitive information. This article does not constitute investment advice.

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