China Education Group (839.HK)Favourable policies revive the valuation February 21, 2019

PSR Recommendation: ACCUMULATEStatus: UpgradedTarget Price: HKDHKD13.44

Investment Summary

China Education Group has engaged in higher and vocational education. We believe “Implementation Plan of Reforms on National Vocational Education” that the State Council of PRC published makes the development of vocational education more certain, and alleviates the concern on the Law on the Promotion of Private Education, enhancing the valuation. Based on the net profit attributable to owners in 2019, we assume a P/E ratio of 30x (the average of the past), deriving a target price of HK$13.44. We downgrade the rating to “Accumulate” in reflection of the recent uptrend in stock price, with a potential upside of 7.52%. (Closing price at 19 Feb 2019)

About the author

Profile photo of Terry Li

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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