Interest Rate Risk The Group’s exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. The Group has not used any derivative financial instruments to manage the Group’s interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. The Group has not been exposed, nor does the Group anticipate being exposed, to material risks due to changes in interest rates. However, the Group’s future interest income may be lower than expected due to changes in market interest rates. The Group may also be subject to interest rate risk in relation to the installment payment option that the Group offers to students that enables them to finance all or part of their tuition from loans provided by third-party credit providers. The borrowing student is obligated to repay the loan principal in installments over a period ranging from 3 to 12 months, while the Group is generally obligated to pay the full amount of interest payable to the credit providers at the very beginning of the loan. The Group may be subject to risks associated with an increase in interest rates to the extent that the Group continues to agree to make the interest payments under such loans. In 2023, 2024 and 2025, the Group’s student loan coverage ratio was 1.3%, 1.9% and 1.7%, respectively. For the same periods, the Group made interest payments of RMB1.5 million, RMB1.7 million and RMB1.9 million (US$0.3 million), respectively, to the credit providers. Foreign Exchange Risk Substantially all of the Group’s revenues are denominated in Renminbi. Renminbi is not freely convertible into foreign currencies for capital account transactions. The value of Renminbi against U.S. dollars and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of Renminbi to U.S. dollars, and Renminbi appreciated more than 20% against U.S. dollars over the following three years. Since June 2010, Renminbi has fluctuated against U.S. dollars, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and U.S. dollars in the future. To date, the Group has not entered into any hedging transactions in an effort to reduce the exposure to foreign currency exchange risk. Inflation Risk Since the Group’s inception, inflation in China has not materially impacted the Group’s results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index were decreases of 0.3% for December 2023, increase of 0.1% for December 2024, and increases of 0.8% for December 2025, respectively. Although the Group has not in the past been materially affected by inflation since the Group’s inception, the Group can provide no assurance that the Group will not be affected in the future by higher rates of inflation in China. 112