Wah Fu Education Group Limited (WAFU) stock prices were up by an impressive 22.99% shortly after the market opened for trading, bringing the price per share up to USD$8.24 early in the trading day.
Online Education Services Boom
With the global onset of the coronavirus pandemic forcing school closures and the proliferation of distance learning, WAFU enjoyed a substantial boost to their online education services. Revenues from online education services for the six month period ended September 30th 2020 were up by 71% to hit USD$4.19 million.
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Revenues on the Rise
This increase hinged on the increase in B2B2C revenues, which, in turn, was dependent on revenue from online continuing education and examination services. Because of the disruptions from Covid-19 and the resulting indefinite suspension of colleges and universities, the increase in the online education services resulted in a steep increase in total revenues for the company, with the six month period ended September 30th 2020 reporting USD$ 4.30 million, a 72.1% increase from the same period of the prior year.
Higher Costs of Revenue
Costs of revenue for the same six month period were up by 24.2% to hit USD$1.85 million, up from the USD$1.49 million reported in the same time period of the prior fiscal year. The increase in cost of revenue was primarily driven by increases in costs of revenue for online education services. As revenue from online education services increased, the cooperation fee paid to collaborators also increased, with the total increase being partially offset by payroll expenses. The payroll expenses were due to a reduction in the total number of employees making up WAFU’s workforce during the six month period ended September 30th, 2020.
Gross Profit and Margin
Gross profit was reported to have increased by 146.5% for the six month period in 2020 as compared to the same time period in 2019. The first half of 2020 reported gross profit amounting to USD$1.44 million, up from the USD$0.99 million reported in the first half of the prior year. Gross margins, consequently, were up by 17.1 points to 56.5%, as compared to the 39.4% reported for the first half of the fiscal year 2019.
Solid Liquidity Position
As of September 30th, 2020, WAFU reported having cash on hand in the amount of USD$9.27 million. This is up from the USD$6.83 million reported as of March 31st, 2020. Total working capital came in at USD$8.64 million as of September 30th, 2020, up from the USD$7.34 million reported as of September 30th, 2019.
Future Outlook for WAFU
With the adversities presented by the global coronavirus pandemic being largely offset by the gains in the online education services segment, the company capitalized on the opportunity to develop its lucrative niche, armed with a solid liquidity position. Current and potential investors are hopeful that the WAFU will continue to grow as a result of addressing the needs that arise from government-mandated regulations and restrictions, thus ensuring significant and sustained increases in shareholder value.
