Securities Brokers Raise Target Prices for China New Higher Education Group for Its Bright Development Prospects
China New Higher Education Group Limited ("China New Higher Education Group", together with its subsidiaries, collectively the "Group"; stock code: 2001.HK), was updated research reports by Citigroup, CICC, China Merchants Securities International, Industrial Securities, and Guosen Securities (HK) raising target prices for the Group for its attractive valuation and bright development prospects.
Recently, the Group announced that the prepayment for the Xinjiang School Acquisition Project was received. The Group can get rid of the negative impact of the acquisition project termination. Additionally, the Group acquired the remaining 45% equity in Henan School. Securities brokers generally believe that the profit of Henan School increased significantly after Group's post-investment management and its valuation is lower than the initial acquisition. In the future, the Group will further improve overall quality of Henan school through collectivized school operation to boost profitability.
Citigroup holds that the Group's acquisition price of Henan School is notably lower than the average acquisition valuation in the industry. Citigroup has raised its earnings forecasts for the Group's, highlighting positive developments of the Group such as strong 2019 results, successful acquisition of Henan School, write-off on provisions for Xinjiang School, and latest share purchase by Chairman. This has bolstered investors' confidence. Citigroup has increased its target price to HKD5.1 and maintained "Buy" for the Group.
CICC holds that the average acquisition cost per student is lower than the valuation of the initial acquisition. CICC expects that the profit of Henan School will grow steadily after the further acquisition as the Group can leverage its collectivized school operation strength to further boost profitability. CICC has revised up its forecast for the Group' earning, maintained "Outperform", and raised its target price by 27% to HKD5.2.
China Merchants Securities International believes that the acquisition has proved the Group's strong implementation capacities and can result in steady recovery of investors' expectations. Therefore, it has increased its target price to HKD5.3 from HKD4.9 and maintained "Buy" rating for the Group.
With the expectation that the further acquisition of Henan School will contribute to the Group's performance in the next few years, Guosen Securities (HK) has revised up its projection about the Group's profit, maintained "Buy" and raising its target price to HKD5.38.
Industrial Securities states that the Group has made early school acquisition deployment, with over 110,000 students by the end of 2019. Besides, there is plenty of room for tuition fees to increase, and favourable policy on vocational education allows for fast expansion in admission quotas. The Group is expected to continue to lead the industry in terms of organic growth in the next two years. Industrial Securities has adjusted its profit forecast for the Group, maintained "Prudently Overweight" and raised its target price to HKD6.5, as the valuation is attractive.
About China New Higher Education Group Limited:
China New Higher Education Group Limited is a leading private formal higher education group in China with 20 years of education industry experience, specializing in providing higher education which focuses on applied sciences. The Group endeavors to help each student maximize their potential and live their life to the fullest. Since 2009, the Group has been operating schools in different provinces and regions, and its current school network covers 7 provinces in China, including Yunnan, Guizhou, Hubei, Heilongjiang, Henan, Guangxi, and Gansu.
The Group provides high quality higher education in a wide selection of fields in applied sciences. Its courses are designed to equip students with practical and readily applicable skills, helping to prepare them for the job market. As a leader in high-quality employment, the Group won the title of the Top 50 National Employment of the MOE, with an average employment rate of above 97%. The Group became a constituent stock of the Hang Seng Composite Small Cap Index and the Hang Seng Consumer Goods & Services Index in the Hang Seng Composite Index Series in August 2017, and was included as a constituent stock of the MSCI China Small Cap Index in November 2017 and included as a constituent stock of Shenzhen and Hong Kong Stock Connect in March 2018.
28/05/2020 Dissemination of a Marketing Press Release, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Media archive at www.todayir.com