Core view: The company released FY2019H1 (for the six months ended February 28, 2019) results (currency is RMB). The operating data is in line with our expectations that the number of FY2019H1 students increased 32.2% year over year to 54420, revenue increased 41.1% year over year to 835.6 million yuan, and gross margin increased from 44.2% in 2018 H1 to 45.3%. The average tuition fee for all schools increased by 5.0% after annualized adjustments. Net profit of the mother increased from 145.0 million yuan in the same period last year to 193.0 million yuan in 2019 H1, an increase of about 33.1% over the same period last year. The main reasons why the growth rate of net profit did not match the growth rate of revenue were: 1. The company's VIE structure design generated more taxable income than in the same period last year, which led to an increase in the effective income tax rate from 8.0% in the same period last year to 14.8%; 2. The increase in the company's bank loans for the development of new schools and school expansion increased net book financial expenses. Short-term company performance is highly certain, but policy uncertainty still exists. The company's enrollment figures were revealed in the last fiscal quarter's annual report, and historical changes in enrollment, such as transfers, had minimal impact. Moreover, changes in the cost and expense ratio of the company's operations are mainly affected by the opening of new schools, so the company's certainty is strong. At present, the new “Regulations on the Implementation of the Private Education Promotion Law” have not yet been reviewed and issued. There is still uncertainty about whether agreement control in section 12 “Non-profit schools shall not be controlled by agreement” is equivalent to the VIE structure. The 2019-2021 CNY performance forecasts were adjusted to 0.19 yuan/share, 0.24 yuan/share, and 0.27 yuan/share, respectively. Considering valuation space, the ratings were adjusted to increase holdings. We adjusted tuition prices, income tax rates, and financial expenses according to the interim results situation. The company's 2019-2021 EPS is expected to be 0.19, 0.24, and 0.27 yuan/share, respectively. The current prices corresponding to the 2019-2021 PE are 19.11, 15.61, and 13.54 times, respectively. We believe that the reasonable valuation is 18 times EPS in 2020, and the corresponding reasonable value per share is 5.02HKD. Considering that the current valuation is close to a reasonable valuation, the rating was adjusted to increase holdings. Risk warning: Policy risks in the classification management of private schools; failure to increase the risk of tuition fees.