China Education Group's Growth Story Continues

We maintain our narrow moat rating for China Education Group, or CEG, and fair value estimate of HKD 22.0, which is 25.7 times fiscal 2022 price/earnings. Our fair value and earnings revision mainly reflects strong fiscal 2021 net profits growth due to better-than-expected margin improvement and consolidation of the newly acquired schools. We remain positive on CEG given it is one of the leading higher education operators in China; year to date, CEG has been expanding footprints over six Chinese provinces, with seven higher education schools and four vocational schools, while overseas higher education expansion includes two schools in Australia and England. Currently, CEG has a total student enrolment of approximately 250,300 students by the end of 2021. In addition, CEG is backed by its strong financial position with a solid execution record.