[ET Net News Agency, 17 June 2020] Macquarie Research lifted its target price for China
Education Group (CEG)(00839) to HK$18 from HK$13.5 and maintained its "outperform" rating.
The research house said CEG is operating 10 schools with 182k students as of 29 February
2020. Macquarie believes the company can grow revenue organically and inorganically and
expand its margins by lifting the margins of acquired schools in-line with the group
level.
Given CEG has exposure to under-supplied provinces, Macquarie believes it has a
significant upside to student enrolment growth with at least high single-digit p.a.
growth.
In the face of rising demand in the Guangdong Province, CEG is expanding school capacity
in the Greater Bay Area (GBA), and Macquarie believes these schools will fit well as we
expect GBA development will provide a larger job market for post-graduation employment.
Macquarie cut its profit forecast by 3.1% for FY2020 to factor in minority interest but
lifted profit estimates by 12.2%/30.4% for FY2021/22 on higher forecasts for student
enrolment. (KL)