China Education Group (839.HK) Acquisition of the remaining equity interest of Quancheng University; the issuance of a HK$2,355 million convertible bond April 24, 2019 394

PSR Recommendation: ACCUMULATE Status: Maintained
Target Price: HKDHKD15.50

Investment Summary
China Education Group has engaged in higher and vocational education. Under the
management of the Group which are experienced in operating schools, we believe the
potential improvement will be huge for the new acquired schools. Besides, the low cost
financing has ensured the acquisition in the future, so the growth from acquisition should
remain strong. Based on the net profit attributable to owners in 2020, we assume a P/E
ratio of 28x (the average of the past), deriving a TP of HK$15.50 and maintain an
“Accumulate” rating, with a potential upside of 18.68%.(Closing price at 18 Apr 2019)

About the author

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Terry Li
Investment Analyst

Graduated from Lingnan University, with Master of Science in International Banking and Finance and Bachelor of Business Administration respectively. Specializes in analyzing company fundamentals and valuation to explore investment opportunities in TMT, Education and Financial industry.

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