Guosheng Securities initiate coverage on CNHE (2001.HK) with "Buy" Rating and Target Price of HK$5.12

Guosheng Securities initiated coverage on CNHE (2001.HK) with a "Buy" rating and target price of HK$5.12 and estimated 88% in share price growth.

Entitled "Focus on marginal improvements; Internally and Externally Sound: Ready for Growth", the report by the securities firm points out that China New Higher Education Group (CNHE) has regional advantages in provinces with great potential that have low gross enrollment rate and higher student participation in the national higher education entrance examination. The Company's colleges have good integration of Industry and Education and frequent cooperation between schools and enterprises, and higher than average employment rates in China. Through its collectivized school operation management, CNHE can replicate its successful education model in new schools that the Company had acquired.

The report also indicates that the Company shows strong internal and external growth, and all of its schools are expanding at a relative fast pace; moreover, the Company has obtained the positive judgement in favour of the Company's claims in Xinjiang School litigation in December 2019, averting relevant prepayment provision risks.

CNHE enjoys competitive edges in such aspects as regional advantages, integration of education combining industry experience, and capability of collectivized school operation, and the graduate high employment rates help the Company establish a positive brand. Expecting the Company's 15x P/E ratio in 2020, steady and healthy endogenous growth and growing profit from acquired schools, Guosheng Securities proposed a target price of HK$5.12 and assigned it a "Buy" rating.