Huatu Shanding Swings to Loss on One-Off Share Charge as Exam-Prep Demand Cools

Huatu Shanding (300492.SZ), the Shenzhen-listed group that moved from architectural design into non-degree vocational training, reported 2.17 billion yuan (about US$322 million) in revenue for the first nine months of 2026, down 11.91% year on year, and a net loss attributable to shareholders of 116.0 million yuan, a 146.56% swing from profit. The loss is largely accounting. Excluding a one-off share-based payment charge of 123.3 million yuan booked when the company terminated its equity incentive plan, net profit would have been 7.32 million yuan, and the training business alone would have earned 31.79 million yuan.

The third quarter was weaker still: revenue of about 630 million yuan, down 15.2%, with a net loss attributable of 149 million yuan and an adjusted loss of 84 million yuan. Management points to two external pressures — a shrinking number of recruitment positions and intensifying competition — plus a lengthening carry-over period on its "through-train" product, which pushes revenue recognition further out. Gross margin for the quarter was 52.5%, down 6.3 percentage points.

Softer demand has not yet reached cash collection. Third-quarter cash receipts were 891 million yuan, up 9.2%, and contract liabilities on the training business stood at 1.17 billion yuan at the end of September, up 26.26% from a year earlier and 49.20% from the end of 2025. Within that, the portion tied to course delivery rose 44.59% year on year to 984 million yuan, while the portion contingent on exam results — effectively the ceiling on refunds — fell 38.86% to 129 million yuan. Huatu says it has deliberately pushed up its "one-time conversion rate", the share of cash collected that is not refundable.

The company has also been repricing how students pay. It now sells some courses in instalments, with students paying part of the fee up front and the remainder only after passing the exam; as of end-September the maximum additional tuition it could collect once results are published was 394.9 million yuan. Online is a small but fast-growing slice: 140 million yuan, 6.51% of training revenue, against 2.01 billion yuan, or 93.49%, from face-to-face teaching.

Physical capacity is being built out in parallel. Fixed assets reached 117 million yuan, up 31.43% from the start of the year on new teaching equipment and office furniture, and long-term prepaid expenses rose 58.02% to 110 million yuan on training-base fit-out. Huatu says expansion is mainly lease-and-retrofit, paced to regional student capacity and per-site economics, and that it will press ahead with regional operating reform while concentrating on long-cycle written-exam programmes. On 16 October it announced plans to rename itself Huatu Shanding Technology, trade as Huatu Technology, and add information systems integration, AI infrastructure and technology platforms, general AI application systems and online publication sales to its registered business scope.