Overview. After communicating with management, we raised the FY20/21E net profit forecast by 3% and raised the target price from HK$5.30 to HK$5.40. The company's current valuation is FY19E 0.66X PEG, which is lower than the industry average of 0.79X, and maintains purchases. An update on school fees for the 2019/20 school year. Dongguan **** School and Dongguan Guangzheng Experimental School will increase high school tuition and accommodation fees by 19% and 42% respectively in 2019/20 to 43,800 yuan/year. Tuition and accommodation fees for Jieyang Jiedong District Guangzheng Experimental School and Weifang Guangzheng Experimental School will also increase by 29-32% and 22-24%, respectively. On the other hand, tuition and accommodation fees for the 2019/20 academic year of Huizhou Guangzheng Experimental School will remain unchanged. We expect Huizhou Guangzheng Experimental School to increase tuition and accommodation fees by 15% in 2020/21 (the last time tuition fees were adjusted to the 2017/18 school year). We maintain our forecast for FY20E ASP growth of 6%, and adjusted the FY21E ASP growth forecast from 8% to 9%. Huizhou Guangzheng Experimental School had outstanding results in the secondary school entrance examination. The first and second highest scores in Huizhou's secondary school entrance examination this year were obtained by two students from Huizhou Guangzheng Experimental School (the company's third university in terms of number of students), respectively. We believe that this outstanding performance in the secondary school entrance examination will increase the number of students admitted to the school in 2019/20. Looking back at 2017, the university's three high school graduates were admitted to Tsinghua University and Peking University, while in 2017/18 the number of students enrolled at the university also increased by 2,108 (an increase of only 1,403 compared to 2016/17). We increased the company's FY20E and FY21E student population forecasts by 1% to 62,516 and 71,388, respectively. Strong endogenous growth potential. The stock's FY19E forecast price-earnings ratio is 17.5 times, or 0.66X PEG (compared to the 26% CAGR forecast for FY20-21), which is lower than the industry average of 0.79X. We believe the company has strong potential for endogenous growth. The expected maximum capacity of its existing schools and new school projects is 129,370 students, which exceeds our FY20E student population forecast of 62,516 by 107%. Valuation. We increased our FY20E and FY21E net profit forecasts by 3%, and raised the target price from HK$5.30 to HK$5.40, still based on the 19x FY20E price-earnings ratio (historical average). Catalysts: (1) better-than-expected growth in student numbers or tuition fees; (2) more new projects announced. Risks: (1) policy risk; (2) rapid increase in teacher costs.