China New Higher Education Group Limited (2001.HK): Greater value form Gansu College but policy risks are emerging August 15, 2018

Investment Summary

CNHEG announced to acquire Gansu College, and gave up its original plan on Northwest school. And, the land for developing Northwest school will serve as the new campus of Gansu College. We believe the acquisition can reduce the time required for cultivating the school and it can leverage on the brand name and teaching resources of Lanzhou University of Technology. However, the Revised Draft of Law for Promotion of Private Education from Ministry of Justice of the PRC proposed a prohibition on the acquisition of non-profit private schools. Based on the DCF model, we give a target price of HKD5.05, and maintain our “Accumulate” rating, with 7.45% potential upside. (Closing price as at 13 August)

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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