The number of students as of September 1 increased 17% year over year to 60,116, 4% lower than our forecast. The Group aims to seek more transfer students in the next semester and increase revenue from supporting businesses to boost the Group's revenue growth rate. We lowered our FY20/21E net profit forecast by 6%/4% and lowered our target price from HK$5.40 to HK$4.60. The number of students fell short of expectations. The Group announced that the number of students as of September 1, 2019 was 60,116, an increase of 17% from 51,520 as of September 1, 2018, lower than the Group's target number of 62,000-63,000, and 4% lower than our forecast of 62,516 students. Reasons for falling short of expectations. We think there are two reasons for falling short of expectations: (1) Jieyang and Weifang schools increased tuition fees by about 30% (from primary school to high school) and 22-24% (middle school and high school) respectively in the new school year, keeping student numbers flat. (2) Affected by delays in some construction projects, the number of students at the **** branch in Dongguan remained the same. On the other hand, although high school tuition fees at Dongguan Guangzheng School have increased by 42%, the number of students is better than we expected. The group added a new school to Bazhong, Sichuan, and enrolled 500-600 students, performing well. Measures to increase revenue growth. The group plans to recruit more transfer students in the next semester, particularly at the three new schools (Foshan, Yunfu, and Bazhong). In addition, the Group plans to provide more services (such as extracurricular activities) and increase prices to increase revenue from ancillary services. Valuation. We reduced FY20/21E's net profit by 6%/4% to reflect a 4% reduction in the FY20/21E student population forecast, and lowered the target price from HK$5.40 to HK$4.60, based on 18 times the FY20E price-earnings ratio (previously 19 times). We still believe that the Group has strong endogenous growth potential due to the expansion strategy dominated by Guangdong Province and the target maximum capacity of existing schools and new students (129.370 students) equivalent to 115% of the current student population. Catalysts: (1) better-than-expected growth in student numbers and tuition fees; risks: (1) policies; (2) lower student numbers and tuition fee growth; (3) higher teacher costs.