Investment Summary

China Maple Leaf Education Systems Limited is a leading international school operator, from preschool to grade 12 education (K-12) in China. Thanks to the rise of middle class in China, its light asset development model and unique dual-diploma curriculum, we believe Maple Leaf will be one of the most promising players in the China education sector. We initiate an “accumulate” rating on Maple Leaf, and a target price of HK$15.48 based on earnings in 19F assuming 1x PEG (30% CAGR on earnings for FY18E-20E), with 12.2% potential upside. (Closing price at 3 July 2018)

Corporate Background

Founded in 1995, it is operating 82 schools (where five are new acquisitions, and yet consolidated) in Dalian, Wuhan, Tianjin, Chongqing, Zhenjiang, Luoyang, Shanghai, Shenzhen, etc. The group has accelerated its school expansion in recent years, with 17 net increases in March of 2018, excluding five new acquisitions. Currently, the group comprised of 13 high schools (for students in grade 10 to 12), 21 middle schools (for students in grade 7 to 9), 21 elementary schools (for students in grade 1 to 6), 19 preschools and 3 foreign national schools.