China Maple Leaf Education Systems Limited is a leading international school operator,
from preschool to grade 12 education (K-12) in China. Although the valuation lifted
recently thanks to the rumor of a looser regulation on “Education Promotion Law”, we
believe that even if there are any difference in regulations compared with “Draft for
deliberation “, the main content will not change much. Therefore, the business risk on
compulsory education and kindergarten are still very high. As a result, we downgrade
the rating from “Neutral” to “Reduce”, with a TP of HK$ 3.78, 10.8% potential downside.
(Closing price at 25 April 2019)