Key points of investment

The leading private education group in Hebei: Established in 2003, 21st Century Education is the leading private education service provider in Hebei Province. It provides services to preschool students in the company's kindergartens, elementary, middle and high school students being counseled by the company's tutoring center, and college and continuing education students attending company colleges. As of December 2017, the company has 15 schools in Shijiazhuang City, Hebei Province, including 1 private university, Shijiazhuang Polytechnic Vocational College, 6 New Sky Training Schools (composed of 11 counselling centers) and 8 New Sky Kindergartens. About 19,000 students enrolled in the company's colleges and kindergartens in the 2017/18 school year, and the Counseling Center provided about 368,000 tutoring hours to about 4,928 students.

Investors are advised to “buy prudently”: As of December 31, 2016, the company's operating income was RMB 170 million and net profit was RMB 45.04 million. Based on the sale prices of HK$0.79, 1.13 and HK$0.96 respectively, the total share capital of the company after issuing new shares will be 1.2 billion shares. The total market capitalization will be HK$948, 1,356 and HK$1,152 million respectively. The corresponding 2017 PE will be 21.0, 30.1 and 25.6 times respectively. By analogy, the 2017 static PE of listed companies Minsheng Education, Yuhua Education, Xinhua Education, New Higher Education Group, and China Education Holdings was 21.5 times, 24.9 times, 27.9 times, 32.6 times, and 34 times, respectively. Investors are advised to “buy carefully”.