（Stock Code: 2001.HK）
Highest Target Price Reached HK$8.40
Stable Growth with Promising Prospect, China New Higher Education Group Favored by the Market
(31 December 2020 - Hong Kong) China New Higher Education Group Co., Ltd. ("China New Higher Education Group", together with its subsidiaries, collectively referred to as the "Group", stock code: 2001. HK) recently announced its annual results for the year ended 31 August 2020. The good performance has attracted the attention of many domestic and foreign securities companies, including Citigroup, Morgan Stanley, DBS, CICC, Shenwan Hongyuan, China Galaxy International, Zhongtai International, China Merchants Securities International, First Shanghai, Industrial Securities, Guosheng Securities, Guosen Securities (HK) and other institutions which have reiterated the "buy" rating. Amony them, Guosen Securities (HK) raised the target price of the Group to HK$8.4 which is the highest target price in the market, believing that the Group's logic of two-wheel driven development strategy of organic growth and value investment in the future will be sustainable.
According to the financial report of the Group in the new fiscal year, the total revenue of China New Higher Education Group in the 2019/2020 academic year was RMB1.46 billion, with a year-on-year increase of 69.6%; the net profit was RMB 480million, with a year-on-year increase of 124.3%; the net profit attributable to the parent was RMB 430million, with a year-on-year increase of 127.3%. In the 2020/2021 academic year, the total number of enrolled students is more than 125,600, with a year-on-year increase of nearly 11%. The organic growth continues to be robust, and the growth rate stays ahead in China.
Guosen Securities (HK) raised its target price from HK$6.77 to HK$8.4, and reiterated its "buy" rating, stating that the financial performance of China New Higher Education Group in the 2020 fiscal year is outstanding and in line with expectations. Beyond the strong main business, other income and gains of the Group also increases steadily. Meanwhile, the Group is relatively stable in mergers and acquisitions with abundant cash in hand. Guosen Securities (Hong Kong) believed that the logic of two-wheel driven development strategy of organic growth and value investment in the future will be sustainable.
Citigroup, which reiterated its "buy" rating and gave a target price of HK$7.9, stating that China New Higher Education Group's strong profit growth in the 2020 fiscal year was mainly due to strong organic growth with solid margin expansion and newly consolidated schools. Citigroup believes that China New Higher Education Group has abundant capital reserves at present. Looking forward to the future, the Group will steadily promote self-founding and M&A. With decent student enrollment growth and tuition fee hike in the 2021 fiscal year, Citigroup expects the growth momentum of China New Higher Education Group to sustain.
Shenwan Hongyuan, which once again reiterated the "buy" rating and maintained the target price of HK$7.91, believes that considering the firm commitment to high-quality development of China New Higher Education Group and the relaxation of tuition fee control policy, the overall tuition fee level of the Group will be further increased in the future. The great post-investment management of China New Higher Education Group can help improving the profit margin. Based on the sound post-investment management of the newly acquired schools, the gross profit margin and net profit margin of China New Higher Education Group have been effectively enhanced; With strict control of sales and management costs, it is expected that the Group's net profit and net profit margin will be further improved in the future.
CICC stated that in the 2020 fiscal year, China New Higher Education Group completed three mergers and acquisition projects with high-quality consideration. Looking forward, the Group is expected to focus on Beijing-Tianjin-Hebei, Guangdong-Hong Kong-Macao Greater Bay Area and other regions, and adopt the mode of "M&A + self-founding" for the layout; in terms of organic growth, CICC expects the revenue of China New Higher Education Group to maintain a high growth rate in the 2021 fiscal year, mainly benefiting from Higher Vocational enrollment expansion, steady growth in students enrollment, and large room for growth in the average tuition fees. CICC reiterated the China New Higher Education Group's "outperforming " rating, with a target price of HK$7.4.
China Merchants Securities International raised its target price to HK$7.20 and reiterated its "buy" rating, stating that the Group's performance in the 2020 fiscal year increased steadily with abundant cash in hand, making it well prepared for future development, expansion and potential acquisition. China Merchants Securities believes the PEG of China New Higher Education Group is more attractive than its peers.
DBS Group stated in its research report that the market has under-estimated China New Higher Education Group's organic growth potential. DBS expected the average tuition fee of the Group to have around 10% y-o-y CAGR growth considering that the Group adopts the strategy of improving pricing power by providing premium quality teaching services. Besides, the Group is also proactively seeking suitable acquisition targets on top of its organic growth. Given that the Group is now trading at 10x FY21F P/E, with relatively high upside potential, DBS reiterated the "buy" rating with target price of HK$7.
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China New Higher Education Group Limited is a leading private higher education group in China with nearly 21 years of education industry experience, specializing in providing higher education. 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, Heilongjiang, Hubei, Gansu, Guizhou, Henan, and Guangxi.
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.
This press release is distributed by Wonderful Sky Financial Group Limited on behalf of China New Higher Education Group Limited.
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Wonderful Sky Financial Group Limited
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31/12/2020 Dissemination of a Marketing Press Release, transmitted by EQS Group.
31 December 2020
31 December 2020