Inconsistent Cash ConversionSub‑1:1 cash conversion indicates reported profits do not fully translate to free cash, constraining organic funding for capex, debt paydown, or shareholder returns. Historical FCF volatility (negative in 2020–2022) increases reinvestment and liquidity risk, forcing reliance on balance sheet actions during weaker cash years.
Margin CompressionA multi-year decline in net margins suggests rising costs or pricing pressure that erodes return on capital. Persistent margin compression would reduce retained earnings and ROE, limit discretionary investment in program quality, and increase sensitivity to any downturns in student enrollment or regulatory changes affecting tuition.
Revenue Concentration On TuitionHeavy reliance on tuition and campus fees concentrates revenue risk on enrollment volumes, demographic shifts and PRC education policy. Limited diversification of cash streams makes long-term earnings sensitive to competition, regulatory tuition caps, or changes in vocational training demand, challenging stability across economic cycles.