【英文】摩根士丹利报告：中国教育行业重组带来的机遇（61页）

China East Education, OW, HK$14.0: The company will benefit from  the vocational education promotion tailwind in China with its excellent reputation for training outcomes and subsequent employment  opportunities. We believe both revenues and margins will gradually  recover following Covid in 2020, especially with the new majors  rolling out, which are mainly 3-year classes to reduce business volatility. We are positive on the long-term outlook for vocational education and training, and CEE's leading position and strong moat. 

We  have lowered our 2021-23 earnings forecasts by 20%-30% to  account for the impact of the Delta variant and have lowered our  price target from HK$20 to HK$14.0, implying 11x 2022 EV/EBITDA,  vs. 15% YoY EBITDA growth in 2022. We reiterate our OW rating. Offcn, UW, Rmb7.7: The company has a leading position in the provision of job seeking training for college students, which will remain in  strong demand given increasing higher education enrollment.  However, we expect competition to intensify following the release of  the "double reduction" regulation (i.e., Opinions on Further  Alleviating the Burden of Homework and After-School Tutoring for  Students in Compulsory Education), with existing K12 AST players  transitioning to new businesses including adult tutoring, which will  pressure margins. 

We expect the competition to last for at least one  year, and regulation could force the players to adjust their business  operations. Valuation is also expensive. We downgrade Offcn to UW  from OW and cut our target price to Rmb7.7, implying 29x 2022 P/E  and 19x 2022 EV/EBITDA.Yuhua, OW, HK$6.8: We like Yuhua's good school quality, above  average ROE, at 30% in F22, and strong balance sheet, although  growth is slower than at peers, as its schools are mature.  Management has demonstrated strong execution, as well. We cut  our DCF-based PT from HK$8.4 to HK$6.8, on lower long-term earnings growth and margin estimates to reflect more competition in  junior colleges, higher operating standards, and the removal of the  value of its K9 schools. Our new PT implies 14.5x F22 P/E, which is  lower than CEG's valuation, but higher than that of other smallersized players, which we think is justified owing to Yuhua's good  school quality and proven strong management execution.