【英文】汇丰银行报告：中国教育行业报告China Education Initiate coverage: Time to study specialist subjects（62P）

Environmental: The company is a low-energy, pollution-free education enterprise and is not  regarded as a discharger of key pollutants by the environmental protection department. Social: 1) Employment – the company provides jobs for highly educated talent. The number of  people recruited in the last three years total 2,374, 8,204 and 6,644, respectively; 2) employee  benefits – the company provides several kinds of welfare and training programmes for  employees; and 3) social welfare – the company provides financial assistance to poor students  by setting up scholarships. Governance: 1) 42.9% of the board members are independent; 2) the roles of the chairman  and the CEO are separated, which benefits corporate governance; and 3) the largest  shareholder holds 41.4% of the total equity, and the ownership concentration ratio remains high. Key downside risks Policy risks: The company’s operations may be adversely impacted if more stringent regulatory  requirements are introduced in relation to the education training industry. Decline in the number of candidates: The reform of governmental bodies or public institutions  may reduce staffing and, as such, lead to a decline in the number of vacancies and acceptance  and the number of candidates. The company’s earnings may be lower than expected as a  result. Slower-than-expected expansion: In addition to its existing businesses, the company is also  expanding into training for postgraduate entrance exams, judicial exams, accounting exams and  other exams. However, it is difficult to predict the progress of the new businesses, given there is  little overlap with existing businesses. Competition from online training: The company offers offline training services. However,  some of its peers provide online training services, which feature faster expansion and lower  costs. This may dampen the company’s business outlook.

Founded in 2005, Guangzhou Shiyuan Electronic Technology (CVTE) was listed on the A-share market in January 2017. The company’s main business is the design, development and sale of  LCD main control boards and interactive panels for the education market. Two of its leading products are Seewo for schools and MAXHUB for corporates. In 2018,  revenue from Seewo was RMB5.68bn, accounting for 90% of the interactive panel revenue and  33% of total revenue. The company has the highest market share of interactive panels for  schools in China (40.4%) in 1H19. In 1H19, the company generated revenue of RMB7.2bn, up 15.85% y-o-y. LCD main control  boards contributed RMB3.9bn, up 8.8% y-o-y, and intelligent interactive panels contributed RMB2.438bn, up 17.1% y-o-y. Net profit attributable to the shareholders of the listed company  was RMB564m, up 46.4% y-o-y; net profit attributable to the shareholders of the listed company  after deducting non-recurring gains and losses was RMB535m, up 45.7% y-o-y.