ChinaEdu Reports Second Quarter 2008 Results

Strong 24.9% Increase in Net Revenue Year-Over-Year
with Second Quarter Net Revenue Exceeding Guidance

Live Conference Call to be held Wednesday, August 20, 2008
at 8 a.m. (Eastern) / 5 a.m. (Pacific) / 8 p.m. (Beijing/Hong Kong)

BEIJING, CHINA – August 19, 2008 – ChinaEdu Corporation (NASDAQ: CEDU) (“ChinaEdu” or the  “Company”), an educational services provider in China, today announced its unaudited financial results  for the quarter ended June 30, 2008.¹

Second Quarter 2008 Highlights

• Total net revenue increased by 24.9% to RMB79.5 million ($11.6 million) in the second quarter of  2008, as compared to RMB63.7 million in the corresponding period in 2007.
• Net revenue from online degree programs increased by 33.9% to RMB65.1 million ($9.5 million) in  the second quarter, compared with RMB48.6 million in the corresponding period in 2007. Revenue  growth from online degree program services in the second quarter of 2008 was fueled by a 25%  year-over-year increase in enrollments to approximately 125,000 students from 100,000 students in  the second quarter of 2007.
• Income before income tax and minority interest increased by 21.8% to RMB27.0 million ($3.9 million)  in the second quarter of 2008, as compared to RMB22.2 million in the corresponding period last year.
• Gross margin improved to 70.6% in the second quarter, as compared to 68.9% in the corresponding period of last year.
• For the six months ended June 30, 2008, total net revenue increased by 24.4% to RMB149.2 million  ($21.7 million) and gross margin jumped to 68.1%, as compared to RMB120.0 million and 64.9%  respectively, for the six months ended June 30, 2007.

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¹ This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollar (“$”) amounts at specified rates solely for the convenience of  the reader. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB6.8591 to $1.00, the noon buying rate in effect on  June 30, 2008 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. The Company  makes no representation that the RMB or U.S. dollar amounts referred to could be converted into U.S. dollars or RMB, as the case may be, at any particular rate  or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.  An explanation of the Company’s non-GAAP financial measures is included in the section entitled “Non-GAAP Financial Measures” below, and the related  reconciliations to GAAP financial measures are presented in the accompanying financial statements.

“We are pleased to report another strong quarter driven by our focused strategy to grow student enrollment  and service revenue. Our second quarter financial results reflect strong organic growth in our online  degree program services resulting from our expanded course offerings and our ability to partner with well  recognized universities throughout China,” said Ms. Julia Huang, ChinaEdu’s Chairman and Chief  Executive Officer. “Our 70.6% gross margin was fueled mainly by our online degree program, which  recorded a gross margin of 79.3% for the quarter and 76.0% for the first six months of the year.”

“We recently signed eight new contracts, bringing us to a total of 20 partnerships with leading universities  across China. We have been offering recruitment and support services to the new partner institutions  through our learning center network, and we remain one of only three institutions approved to operate such  a network in various cities and provinces throughout China. We continue to invest in expanding our  learning center network, as we believe this will further boost student enrollment in our online degree  programs and generate significant additional revenue in the long term.” Ms Huang added.

Financial Results for the Second Quarter Ended June 30, 2008

Net Revenue

Total net revenue for the second quarter of 2008 was RMB79.5 million ($11.6 million), representing an  increase of 24.9% compared with the corresponding period in 2007. Net revenue from online degree  programs, the Company's core business segment, was RMB65.1 million ($9.5 million) for the second  quarter of 2008, representing a 33.9% increase compared with RMB48.6 million for the corresponding  period in 2007. This increase was primarily attributable to the significant growth in the number of  revenue students² enrolled in our university partners’ online degree programs during the quarter. In  aggregate, the Company’s university partners had enrolled approximately 125,000 revenue students during  the second quarter of 2008, representing a 25% increase compared with 100,000 revenue students in the  corresponding period of last year.

Net revenue from the Company’s non-online degree programs (international curriculum programs, private  primary and secondary schools and online tutoring programs) was RMB14.4 million ($2.1 million) for the  second quarter of 2008, representing a 4.3% decrease compared with RMB15.0 for the corresponding  period in 2007.

Cost of revenue

Total cost of revenue was RMB23.4 million ($3.4 million) for the second quarter of 2008, representing an  increase of 18.1% compared with RMB19.8 million for the same period in 2007. Cost of revenue for  online degree programs was RMB13.5 million ($2.0 million) in the second quarter of 2008, representing an increase of 13.5% compared with RMB11.9 million in the second quarter of 2007. As compared to the 33.9% increase in revenue for online degree programs, the corresponding increase in cost of revenue  was much smaller. This further demonstrates the scalability of our online service model and supports our  margin strength. Cost of revenue for non-online degree program services was RMB9.9 million ($1.4  million) in the second quarter of 2008, representing a 25.1% increase, compared with RMB7.9 million in  the second quarter of 2007. This increase was attributable primarily to a registration fee payment for the  BCIT international program during the second quarter of 2008, and an increase in the number of faculty  members at one of our private schools, the Anqing School, during the quarter in response to projected  growth in student enrollment at that school.

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² “Revenue students” refer to students of the university online degree programs that have paid tuition during the applicable period.

Gross Profit

Gross profit for the second quarter of 2008 was RMB56.1 million ($8.2 million), representing a gross  margin of 70.6%. This compares with gross profit and a gross margin of RMB43.9 million and 68.9%,  respectively, in the second quarter of 2007. The increase in gross margin for the three months ended June  30, 2008 was primarily due to an improvement in the profit margin in the Company’s online degree  program services, which improved to 79.3% in the second quarter of 2008 from 75.6% in the second  quarter of 2007.

Operating Expenses

Total operating expenses were RMB33.3 million ($4.8 million) for the second quarter of 2008,  representing a 49.3% increase compared with RMB22.3 million for the corresponding period in 2007.  This increase was attributable primarily to the growth of the company’s business, which impacted both  general and administrative and research and development expenses.

• General and administrative (G&A) expenses were RMB20.4 million ($3.0 million) for the second  quarter of 2008, versus RMB14.3 million for the second quarter of 2007. The 42.8% increase in  G&A expenses was attributable primarily to (1) the increase in the number of employees, mainly in  the learning center business, and the related increase in discretionary stock-based compensation paid  to these employees, (2) an increase in rent and depreciation expenses related to new office space, and  maintenance expenses related to the expansion of learning centers, and (3) additional expenses  associated with being a newly U.S.-listed public company, including increased accounting personnel  and related consulting and legal service fees.
• Selling and marketing expenses were RMB7.0 million ($1.0 million) for the second quarter of 2008,  representing an increase of 116.9% compared with RMB3.2 million for the corresponding period in  2007. This increase is attributable primarily to the increase in sales and marketing activity as well as  the hiring of additional sales and marketing personnel in response to the ongoing expansion of the  Company’s business.
• Research and development (R&D) expenses for the second quarter of 2008 were RMB5.8 million  ($0.9 million), compared with RMB4.7 million for the corresponding period in 2007, with the 22.8%  increase attributable primarily to increased R&D personnel and activities related to the interactive  services for use in the Company’s collaborative alliances.³
• Share-based compensation, which was allocated to the related operating cost and expense line item,  was RMB1.7 million ($0.2 million) in the second quarter of 2008, representing a 72.3% increase  compared with RMB1.0 million for the corresponding period in 2007. This was attributable to an  increase in the number of options granted in the first quarter of 2008, which in turn increased  share-based compensation during the second quarter of 2008.

Income from Operations

Income from operations was RMB22.9 million ($3.3 million) for the second quarter of 2008, representing  a 5.9% increase compared with RMB21.6 million for the corresponding period in 2007. Income from  operations excluding share-based compensation and amortization of intangible assets (non-GAAP) for the  second quarter of 2008 increased by 8.3% to RMB 26.8 million ($3.9 million) from RMB24.8 million for  the corresponding period in 2007.

Interest income

Interest income increased by 202.6% to RMB2.6 million ($0.4 million) in the second quarter of 2008,  compared with RMB0.9 million in the corresponding period in 2007. This increase was attributable  primarily to the interest income earned on the net proceeds from the Company’s initial public offering  completed in December 2007.

Income Tax Expense and Minority Interest

Income tax expense for the second quarter of 2008 was RMB9.4 million ($1.4 million), representing a  161.4% increase from RMB3.6 million for the corresponding period in 2007. Most of our subsidiaries  and affiliate companies previously were qualified under prior tax laws and regulations as “new and high  technology enterprises,” and therefore were subject to certain tax exemptions and a preferential tax rate.  Under the new Chinese Enterprise Income Tax Regulation that became effective in 2008, the statutory tax  rate for all enterprises in China is 25%, except for “new and high technology enterprises,” which are  required to re-apply for such status in order to be subject to the 15% preferential tax rate. We are  currently applying for “new and high technology enterprise” status; however, until we receive official  approval of this status, the Company must use the 25% statutory tax rate instead of the current preferential  tax rate. As a result, the effective income tax rate applicable to the Company was significantly higher in  the second quarter of 2008 than during the corresponding period in 2007.

Minority interest was RMB8.4 million ($1.2 million) in the second quarter of 2008, representing a 37.3%  increase from RMB6.1 million in the corresponding period in 2007, primarily attributable to the higher net  profit earned by some of the Company’s collaborative alliances.

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³ “Collaborative alliance” or “Collaborative alliances” refer to the subsidiary or subsidiaries that the Company formed with certain  university partners to provide services to their online degree programs, which subsidiaries are majority owned by the Company.

Net Income

ChinaEdu reported GAAP net income of RMB9.2 million ($1.3 million) in the second quarter of 2008,  compared with RMB12.4 million in the corresponding period in 2007. This decrease was attributable  primarily to the adoption of the new unified income tax rate, as discussed above. The increase in costs  associated with the active expansion of the Company's learning center network also impacted net income  for the quarter. Diluted earnings per ordinary share for the second quarter of 2008 was RMB0.15 ($0.022)  compared with RMB0.26 per share in the corresponding period in 2007. This decrease was also  attributable primarily to the factors discussed above, together with the increase in the total number of  outstanding shares following the Company’s initial public offering in December 2007.

Net income excluding share-based compensation and amortization of intangible assets (non-GAAP) was  RMB 12.8 million ($1.9 million) in the second quarter of 2008, compared with RMB 15.5 million in the  corresponding period in 2007.

Deferred Revenue

Deferred revenue at the end of the second quarter of 2008 was RMB 86.8 million ($12.7 million), with  current deferred revenue of RMB81.0 million ($11.8 million) and non-current deferred revenue of RMB5.9  million ($0.9 million).

Cash and Cash Equivalents

As of June 30, 2008, ChinaEdu reported cash and cash equivalents of RMB400.7 million ($58.4 million),  which primarily consisted of cash-on-hand, demand deposits and term deposits with maturity periods of  three months or less. Term deposits and the amount due from related parties amounted to RMB33.0  million ($4.8 million) and RMB168.6 million ($24.6 million), respectively, at June 30, 2008.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA, a non-GAAP figure that we define as earnings before minority interest, interest, taxes,  depreciation, amortization and stock-based compensation expenses, was RMB 29.9 million ($4.4 million)  for the second quarter of 2008, representing an increase of 11.0% from RMB26.9 million in the second  quarter of 2007.

Year-to-Date Financial Results

For the six months ended June 30, 2008, the Company reported total net revenue of RMB149.2 million  ($21.7 million), representing an increase of 24.4% from RMB120.0 million in the corresponding period in  2007. Total net revenue for the sixth months ended June 30, 2008 consisted of RMB120.1 million ($17.5  million) in net revenue from online degree programs and RMB29.1 million in net revenue from non-online  degree programs. For the first six months of 2008, total cost of revenue was RMB47.5 million ($6.9  million), compared with RMB42.1 million in the corresponding period in 2007.

Gross profit of RMB101.6 million ($14.8 million) was 68.1% of total revenue for the first half of 2008,  compared with RMB 77.9 million, or 64.9% of total revenue, for the first half of 2007. Total operating  expenses were RMB65.9 million ($9.6 million), representing an increase of 47.7% from RMB44.6 million  for the first six months of 2007.

ChinaEdu reported net income of RMB11.3 million ($1.6 million) in the first six months of 2008, a  decrease of 9.6% compared with RMB12.5 million in the first six months of 2007. Diluted earnings per  ordinary share for the first half of 2008 decreased to RMB0.18 ($0.026) from RMB0.27 per share in the  first half of 2007.

2008 Third Quarter Total Net Revenue Guidance

ChinaEdu expects its total net revenue in the third quarter of 2008 to be in the range of RMB78 million  ($11.4 million) to RMB80 million ($11.7 million), representing an increase of 20% to 23.1% from the total  net revenue in the third quarter of 2007. This forecast reflects ChinaEdu’s current and preliminary view,  which is subject to change.

Conference Call

ChinaEdu senior management will host a conference call on Wednesday, August 20, 2008 at 8:00 a.m. U.S.  Eastern time / 5:00 a.m. U.S. Pacific time / 8:00 p.m. Beijing/Hong Kong time.

Dial-in information for the live earnings conference call is as follows: +1-866-700-0133 (U.S.) /  +1-617-213-8831 (International), and entering the passcode: CEDU. A telephone replay of the  conference call will be available until August 27, 2008 by dialing +1-888-286-8010 (U.S.) or  1.617.801.6888 (International) and entering passcode: 12350208. A live and archived webcast may also  be accessed via the Internet at http://ir.chinaedu.net.

Non-GAAP Financial Measures

To supplement the unaudited condensed consolidated financial information presented in accordance with  Accounting Principles Generally Accepted in the United States of America (“GAAP”), the Company uses  non-GAAP measures of income from operations, net income, which are adjusted from results based on  GAAP to exclude share-based compensation and amortization of intangible assets. The Company also  uses EBITDA and Adjusted EBITDA, both of which are non-GAAP measures, which are adjusted from  GAAP results of net income to exclude minority interest, interest, taxes, depreciation, amortization and  stock-based compensation expenses. These non-GAAP financial measures are provided to enhance the  investors’ overall understanding of the Company’s current and past financial performance in on-going core  operations as well as prospects for the future. These measures should be considered in addition to results  prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior  to GAAP results. Management uses both GAAP and non-GAAP information in evaluating and operating  business internally and therefore deems it important to provide all of this information to investors.

About ChinaEdu

ChinaEdu Corporation is an educational services provider in China, incorporated as an exempted limited  liability company in the Cayman Islands. Established in 1999, the Company’s primary business is to  provide comprehensive services to the online degree programs of leading Chinese universities. These  services include academic program development, technology services, enrollment marketing, student  support services and finance operations. The Company’s other lines of businesses include the operation  of private primary and secondary schools, online interactive tutoring services and providing marketing and  support for international curriculum programs.

The Company believes it is the largest service provider to online degree programs in China in terms of the  number of higher education institutions that are served and the number of student enrollments supported.  The Company currently has strategic relationships with 20 universities to operate online degree programs,  nine of which are under long-term, exclusive contracts that vary from 15 to 50 years in length.

Forward-Looking Statement

This press release contains “forward-looking statements” within the meaning of the Private Securities  Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are  subject to numerous assumptions, risks, and uncertainties. Forward-looking statements involve known and  unknown risks, uncertainties and contingencies, many of which are beyond our control which may cause  actual results, levels of activity, performance or achievements to differ materially from any future results,  levels of activity, performance or achievements expressed or implied by such forward-looking statements.

The Company’s actual results could differ materially from those contained in the forward-looking  statements due to a number of factors, including those described under the heading “Risk Factors” in the  Company’s final prospectus filed with the Securities and Exchange Commission on December 11, 2007,  and in documents subsequently filed by the Company from time to time with the Securities and Exchange  Commission. Unless required by law, the Company undertakes no obligation to (and expressly disclaim  any such obligation to) update or revise any forward-looking statements, whether as a result of new  information, future events or otherwise.

For investor and media inquiries, please contact:

Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +1 908-442-9395
E-mail: helen@chinaedu.net

Simon Mei
Chief Financial Officer
ChinaEdu Corporation
Phone: +86(10)84187301
E-mail: simon@chinaedu.net

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