KGI Initiated Coverage on China New Higher Education With “Outperform” Rating and a Target Price of HKD5.20

(4 October 2017, Hong Kong) China New Higher Education Group Limited (“China New Higher Education”, together with its subsidiaries, “the Group”, stock code: 2001.HK) was initiated coverage by KGI Securities with “Outperform” rating and a target price of HKD5.20. KGI suggested that China New Higher Education was one of China’s leading private higher education operators with over 12 years of experience in the education business.

KGI Securities pointed out that the Group’s graduate employment rates had topped 98% in the past three years, higher than the industry average of 86-92%, its future earnings growth would come from higher tuition fees, enlarged capacity and new schools via M&A or green field investment. KGI projected a three-year CAGR in the Group’s revenue of 37.0% from FY2017 to FY2019 and a CAGR in its net profit of 48.7% from 2016 to 2019.

With riding on promising outlook for higher education in China, KGI indicated that the Group would achieve future growth including higher tuition fees for each school, higher student enrollment, enlarged capacity, fully consolidated figures from the Northeast School and the Central China School, and new contribution from the Lanzhou School. Based on the factors including potential in the higher education market, the Group’s above-average enrollment rate, future growth and earnings quality, “Outperform” rating was initiated by KGI with a target price of HKD5.20.