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China New Higher Education Acquires All Interest in School Sponsor of Henan School

Being Optimistic about the School's Growth Potential

Constantly Giving Full Play to the Strength in Collectivised Management 

(Hong Kong, May 8, 2020) China New Higher Education Group Limited ("China New Higher Education", together with its subsidiaries, the "Company"; stock code: 2001.HK) is pleased to announce the further acquisition of 45% equity interest in Henan Rongyu, the school sponsor of Henan School, with the consideration of RMB384,800,000. So far, the Company has successfully acquired 100% equity interest in Henan School.

After the completion of acquisition of 55% equity interest of Henan Rongyu and Henan School on 8 October 2018, the further acquisition of the remaining 45% equity interest is in the interests of the Company and its shareholders:

(i) The further acquisition reflects the Company's strategy to improve its penetration in regional markets with rapid growth.

Henan Province is one of the most populous provinces in China and the largest source of students participating in the national higher education entrance examination. The gross higher education enrolment rate of Henan Province is slightly lower than that of the average level of China, bringing higher potential for improvement. Also, the GDP growth rates of Henan Province were above the national average level in recent years, bringing better opportunity for future growth in tuition fee;

(ii) The further acquisition is helpful to give full play to the Company's strength in collectivised school operation and to achieve the Company's high-quality development goals.

Upon the acquisition of 55% equity interest in the school sponsor of Henan School, the Company improved its operational efficiency through its strength in collectivised school operations. The student enrolment of Henan School for the academic year of 2019/2020 increased by approximately 9,000 to over 27,000 as compared to the academic year of 2017/2018 prior to the first acquisition. The profitability of Henan School has also been significantly improved: the net profit of Henan School in 2019 increased significantly by 361% as compared to that in 2017. Upon the completion of the further acquisition, it will fully avail itself of the strength in collectivised school operations and the operational capability and profitability will be further improved;

(iii) The valuation for the further acquisition is reasonable. The costs per student of the acquisition is also lower than that of the first acquisition.

Additionally, being the only private institution of formal higher education in Luoyang City, Henan Province, Henan School has distinguished competitive advantages locally. Currently, Henan School has 36 higher-level vocational majors, focusing on e-commerce, software technology, internet of things application technology, etc. It successively won honours including the "National Applied Talents Cultivation Project", "Advanced Unit of Henan Province", and "The First Batch of Pilot Colleges to Hold the National e-Commerce Skills Examination". Its social reputation has been widely recognised. Henan School has ensured effective school-enterprise cooperation with many renowned enterprises. With the support of excellent teaching ability and high-quality employability, it can strongly attract students to enrol and drive the growth of student numbers and tuition fees. Therefore, there will be greater opportunity for the growth of student numbers and tuition fees in the coming years. After the further acquisition, the Company can more fully introduce advanced management models and constantly improve its operational capability and profitability.

Chairman Li Xiaoxuan of China New Higher Education said,"The Company's acquisition of all interest in Henan School demonstrates its determination to constantly improve its penetration in key regions with huge growth potential in higher education. The Company is very optimistic about the future development of Henan School. It has full confidence in bringing in collectivised management, improving operational capability, and achieving better performance after Henan School becomes a wholly owned school. Looking into the future, the Company will remain true to its original aspiration for school operations, provide high-quality and higher-level vocational education services, constantly give full play to its strength in collectivised school operation, and seek for more development opportunities, in order to bring ideal returns to investors who have long been supporting the Company."

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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.