China New Higher Education was Initiatively Covered by Sinolink Securities with “Buy” Rating and a Target Price of HKD7.0

(1 December 2017, Hong Kong) China New Higher Education Group Limited ("China New Higher Education", together with its subsidiaries, "the Group", stock code: 2001.HK) was initiatively covered by Sinolink Securities with “Buy” rating and a target price of HKD7.0. Sinolink Securities suggested that China New Higher Education is a growing cash cow and builds its future through M&A and greenfield investment.
 
Sinolink Securities stated that the private higher education industry develops rapidly in the PRC. With the continuous advancement of private education promotion law, the private education industry is expected to benefit from capitalization and speed up its expansion to increase market concentration. As one of the earliest listed private education groups, the Group expands its operation through M&A and greenfield investment. The student enrollment of Yunnan School is expected to increase rapidly in the future since its scale has been approved to be doubled. The school utilization ratio of Guizhou School, Northeast School and Central China School has enhancement potentials. Sinolink Securities indicated that the increase in the revenue of the Group is mainly due to the increase in tuition fee and student enrollment, which has promoted the increase in both revenue and net profit of the Group. Sinolink Securities also pointed out that the Group, with increased gross profit margin and net profit margin as well as a low asset-liability ratio, has strong solvency and financing capacity, which is conducive to its future scale expansion.
 
In light of the aforementioned factors, Sinolink Securities expressed an optimistic attitude towards the future development prospects of the Group. Based on the 25 times of price-earnings ratio in 2018, Sinolink Securities initiated a “Buy” rating with a target price of HKD7.00 for the Group and a long-term competitiveness rating higher than industry average.