Performance Brief On November 28, 2019, Maple Leaf Education released a performance report for the fiscal year 2019. Revenue was +17.1% year over year, and net profit increased by +21.5% year over year, which exceeded expectations: The performance report showed that in FY2019, Maple Leaf Education's operating income was 1,570 million yuan (+17.1% YoY), net profit was 654 million yuan (+21.5% YoY), and adjusted net profit of 690 million yuan (+16.5% YoY), which exceeded expectations. The composition of the number of students - the proportion of high schools declined, and efforts were made to develop middle schools, primary and secondary schools: ① Absolute value of the number of students in FY2019 Maple Leaf Education was 41,241, +23.2% year-on-year, of which the number of high school students was 8155, -9.3%, the number of middle school students was 8841, +43.6%, the number of elementary school students was 18,771, +27.7%, and the number of kindergartens was 5096, +56.1%. ② Student population structure: In recent years, the proportion of high school students has continued to decline, and the proportion of middle and middle school students has increased markedly, reflecting Maple Leaf Education's “pyramid strategy”, which focuses on expanding middle schools and increasing the base of underage students, which is expected to increase the time students stay in school, train more integrated elementary, middle, and high school students, and lay the foundation for long-term sustainable development. The 2018/2019 academic year is the fourth year of the company's fifth five-year plan. The five-year plan is expected to achieve the expected goals. The sixth five-year plan is about to begin, with a target of 11,000 students enrolled. School expansion: As of August 31, 2019, the company has a total of 95 schools, including 15 high schools, 24 middle schools, 25 elementary schools, 28 kindergartens, and 3 foreign schools, an increase of 13 compared to 82 last year. The company continues to expand schools internally, mainly through an asset-light model: in September 2019, Xiangyang School in Hubei, Jinan School in Shandong, and Sand School in Ontario, Canada opened. Outreach M&A implementation: The company completed the merger and acquisition of Xiangyang Kindergarten in September 2018 and Luzhou School in March 2019. The financial structure is healthy, with book cash exceeding 2.7 billion yuan, and the dividend rate reaching 3.6%: the company's financial structure is healthy. At the end of the FY2019 period, the company's book cash was about 2.76 billion yuan, while interest-bearing debt was only about 300 million yuan. It is estimated that in FY2019, the company will pay a total dividend of 253 million yuan, a dividend rate of about 38% of net profit, and a dividend rate of about 3.6%. Good cash flow lays the foundation for the company to continue to pay dividends in the future. Investment advice: We believe that in the FY19 performance report, Maple Leaf Education shows a healthy development trend. It is estimated that FY20/FY21 corresponds to PE valuation of about 9x/7x. There is an underestimation situation. We expect Maple Leaf Education to continue to expand healthily in the future, mainly in an asset-light model. After the middle school expansion cycle, it is also expected that it will enter a high school expansion cycle. At the same time, we believe that the company may maintain a good financial structure and maintain a high dividend ratio in the future. Maintain a “buy” rating. Risk warning: The company's official annual report has not yet been disclosed, K12 school policies may be risky, etc.