HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China New Higher Education / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-new-university" target="_blank" data-smartkarma-citation="entities:23626:1" rel="noopener">China New Higher Education (2001 HK)</a>'s gearing (including contract liabilities) has come down to 61.2% in 1H25, from 69.9% in FY24 and 84.1% in FY23 - an encouraging trend. </li>
<li>Net profit grew 8.6%, even faster than the full-year consensus forecast of 3.5% growth. There are multiple drivers that support its medium-term outlook.</li>
<li>CNHE trades on 1.7x PER and 0.3x P/B, but the FY25 ROE is a solid 16.6%. Should the payout ratio remain unchanged, its yield will reach 28.4%.</li>
</ul>



China New Higher Education (2001 HK)'s gearing (including contract liabilities) has come down to 61.2% in 1H25, from 69.9% in FY24 and 84.1% in FY23 - an encouraging trend. 
Net profit grew 8.6%, even faster than the full-year consensus forecast of 3.5% growth. There are multiple drivers that support its medium-term outlook.
CNHE trades on 1.7x PER and 0.3x P/B, but the FY25 ROE is a solid 16.6%. Should the payout ratio remain unchanged, its yield will reach 28.4%.


China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B

<ul>
<li>Positive response of <a href="https://www.smartkarma.com/entities/china-education-group-holdin" target="_blank" data-smartkarma-citation="entities:18218:1" rel="noopener">China Education Group (839 HK)</a>'s placement indicated a good return of investor appetite to the sector. Its premium multiples stay well justified even after recent rally. </li>
<li>The HK$1.6bn proceeds will reduce gearing to 29.2% (including contract liabilities) from 41.7% with minimal dilution. Narrowing in valuation gap against asking price of targets means more M&amp;A potential. </li>
<li>More funding for expansion of existing campuses, increase in accommodation and the set up of COVID-19 related curriculum will allow CEG to realise higher revenue per student.</li>
</ul>


Positive response of China Education Group (839 HK)'s placement indicated a good return of investor appetite to the sector. Its premium multiples stay well justified even after recent rally. 
The HK$1.6bn proceeds will reduce gearing to 29.2% (including contract liabilities) from 41.7% with minimal dilution. Narrowing in valuation gap against asking price of targets means more M&amp;A potential. 
More funding for expansion of existing campuses, increase in accommodation and the set up of COVID-19 related curriculum will allow CEG to realise higher revenue per student.


China Education Group (839 HK): Solidifying Investment Thesis After Placement

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a> remains well-positioned in the government's support of vocational education, despite its YTD outperformance.</li>
<li>Higher average tuition per student, better cost control, accelerating growth in the "Fashion and Beauty" segment,  and new course introduction are the main profit drivers.</li>
<li>Net cash equals 17.2% of the share price, while other peers are struggling with debt repayment. Coupled with stronger earnings CAGR, its premium PERs are justified.</li>
</ul>



China East Education (667 HK) remains well-positioned in the government's support of vocational education, despite its YTD outperformance.
Higher average tuition per student, better cost control, accelerating growth in the "Fashion and Beauty" segment,  and new course introduction are the main profit drivers.
Net cash equals 17.2% of the share price, while other peers are struggling with debt repayment. Coupled with stronger earnings CAGR, its premium PERs are justified.


China East Education (667 HK): In an Excellent Position

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a>'s 1H24 result is impressive with a 58% YoY increase in adjusted net profit. Good cost control is a key contributing factor. </li>
<li>Profitability has improved in all business segments. Its strategy to focus on higher-value courses has led to further improvement in annualised tuition per student. </li>
<li>The 1H24 result equals 68% of the full-year consensus, implying an upside in market expectations. Its net cash, at 35% of market capitalisation, is unmatched by peers.</li>
</ul>



China East Education (667 HK)'s 1H24 result is impressive with a 58% YoY increase in adjusted net profit. Good cost control is a key contributing factor. 
Profitability has improved in all business segments. Its strategy to focus on higher-value courses has led to further improvement in annualised tuition per student. 
The 1H24 result equals 68% of the full-year consensus, implying an upside in market expectations. Its net cash, at 35% of market capitalisation, is unmatched by peers.


China East Education (667 HK): Rock Solid Improvements

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-education-group-holdin" target="_blank" data-smartkarma-citation="entities:18218:1" rel="noopener">China Education Group (839 HK)</a>'s plunge in share price is due to management's guidance for a 10-15% drop in adjusted net profit, significantly lower than the current consensus.</li>
<li>Its decision to pause dividends for the foreseeable future on debt repayment burden and tight offshore refinancing environment for the sector has further disappointed the market.</li>
<li>Based on guidance, its PER of 3.7x and nil dividend yield for FY25 make it unattractive relative to peers (1.7-2.9x PER). We shy away until things improve.</li>
</ul>



China Education Group (839 HK)'s plunge in share price is due to management's guidance for a 10-15% drop in adjusted net profit, significantly lower than the current consensus.
Its decision to pause dividends for the foreseeable future on debt repayment burden and tight offshore refinancing environment for the sector has further disappointed the market.
Based on guidance, its PER of 3.7x and nil dividend yield for FY25 make it unattractive relative to peers (1.7-2.9x PER). We shy away until things improve.


China Education Group (839 HK): A Large Disappointment

China

Edvantage Group Holdings Ltd is a private higher education group. The Company operates private, higher education institutions located in China and Australia. Edvantage Group Holdings operates as a holding company.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Edvantage Group (382 HK)

China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B

China New Higher Education shows improved gearing and strong profit growth in 1H25, with a promising medium-term outlook and attractive valuation...

Osbert Tang, CFA

China Education Group (839 HK): Solidifying Investment Thesis After Placement

CEG's placement will reduce gearing to 29.2% (including contract liabilities) from 41.7%. Its M&A progress will also benefit from narrowing...

Osbert Tang, CFA

China East Education (667 HK): In an Excellent Position

China East Education issued a positive profit alert, pointing to a 45-50% YoY increase in earnings for 1H25, citing a 10% increase in revenue and...

Osbert Tang, CFA

China East Education (667 HK): Rock Solid Improvements

China East Education’s FY24 earnings of Rmb512.6m (+88%) beat the consensus forecast (Rmb419.5m) by a significant margin. Its 2H24 adjusted net...

Osbert Tang, CFA

China Education Group (839 HK): A Large Disappointment

CEG's share price plunged on the back of lower profit and a decision to pause dividends due to high debt repayment and tight refinancing. Its...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B

​China New Higher Education shows improved gearing and strong profit growth in 1H25, with a promising medium-term outlook and attractive valuation...

Osbert Tang, CFA

China Education Group (839 HK): Solidifying Investment Thesis After Placement

CEG's placement will reduce gearing to 29.2% (including contract liabilities) from 41.7%. Its M&A progress will also benefit from narrowing...

Osbert Tang, CFA

China East Education (667 HK): In an Excellent Position

China East Education issued a positive profit alert, pointing to a 45-50% YoY increase in earnings for 1H25, citing a 10% increase in revenue and...

Osbert Tang, CFA

China East Education (667 HK): Rock Solid Improvements

China East Education’s FY24 earnings of Rmb512.6m (+88%) beat the consensus forecast (Rmb419.5m) by a significant margin. Its 2H24 adjusted net...

Osbert Tang, CFA

China Education Group (839 HK): A Large Disappointment

​CEG's share price plunged on the back of lower profit and a decision to pause dividends due to high debt repayment and tight refinancing. Its...

Osbert Tang, CFA

China New Higher Education shows improved gearing and strong profit growth in 1H25, with a promising medium-term outlook and attractive valuation...

CEG's share price plunged on the back of lower profit and a decision to pause dividends due to high debt repayment and tight refinancing. Its...