【英文】摩根士丹利报告：中国教育行业重组带来的机遇（61页）

英文研究报告 2021年09月14日 06:38 管理员

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.