宇华教育(6169.HK):Maintain “BUY”,TP 6.6HKD

Investment highlights:Maintain “BUY”, TP 6.6HKD.

机构:兴业证券

评级:买入

评级:6.6港元

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Investment highlights 

Maintain “BUY”, TP 6.6HKD: the company’s overall enrollment exceed our expectation during 2018/19 academic year, and the universities’ performance is even more prominent. Both universities’ tuition fee has been increased on a range of 10%-30%, and the new high rate of enrollment has not  been affected by the increase in fees. K-12 tuition fees and the freshmen enrollment has been increased steadily, at the same time, the “985211” rate has reached new high again. Based on the number of students enrolled and the adjustment of tuition fees exceeding expectations, we upgraded the company's profit forecast by 67 million RMB and 110 million RMB respectively, resulting in net profit of 580 million RMB, 811 million RMB and 980 million RMB in fiscal year 2018-2020, an increase of 35.5%, 38.7% and 21.9% respectively. Maintain the "buy" rating and maintain the target price of HK $6.6. There is 79% room for improvement over the closing price of October 5, 2018, corresponding to 32x, 23x and 19x PE for fiscal year 2018-2020, and 1x the three-year compound growth rate of PEG for fiscal year 2018-2020.

Zhengzhou university enrollment exceeded expectation: enrollment of Zhengzhou university reached 96% in the 2018/19 academic year, exceeding the previous 92%-94% average. Freshmen enrollment exceeded 10,000 and the total number of school students exceeded 30,000, the employment rate of 2018 graduates reached above 95% and the graduate entrance examination rate reached 14.7%. Zhengzhou university ranked first in China's Alumni Association's private university list in Henan Province, and the seventh place in the country. 

Hunan university tuition rose significantly: the tuition fees for freshmen of Hunan university rose by 5,000 yuan to 20,000-22,700 yuan per year, and the tuition fees for junior college students rose by 2,000 yuan to 11,200-13,400 yuan per year in 2018/19 academic year. At the same time, Hunan university’s enrollment rate reached 96%, a record high, and the total number of students in schools was over 30,000.

K-12 awards higher Gaokao achievements: In 2018, eight students from Yuhua schools were admitted to Tsinghua University and Peking University. Among them, there are seven students from Zhengzhou Yuhua School were admitted to Tsinghua University and Peking University, and one student from Jiaozuo Yuhua School was admitted to Peking University. The company's “985211” key university rate reached 26.4%, compared with the average “985211” rate in Henan Province is less than 4%; the company's first-batch-university rate reached more than 40%, whereas Henan Province's average rate is 10.7%.  

K-12 enrollment went steadily and tuition fees increased smoothly: the enrollment of freshmen students in K-12 school increased more than the same period last year, and tuition fees kept a steady 5% annual average growth rate. 

Risk tips: 1) changes in the national education policy; 2) company acquisition, self-construction and other expansion process under expectation; 3) students, parents unsatisfied in teaching quality; 4) VIE structure policy risk. 

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格隆汇声明:文中观点均来自原作者,不代表格隆汇观点及立场。特别提醒,投资决策需建立在独立思考之上,本文内容仅供参考,不作为实际操作建议,交易风险自担。

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