The company achieved net profit of 656.8 million yuan in fiscal year 19 (up 21% year on year), in line with our expectations. In FY20, Maple Leaf Education will continue to drive domestic business growth by expanding the school network and increasing tuition fees. Although the company continues to increase overseas business, it is believed that China's policy risk in the short term is still the main uncertainty facing Maple Leaf. Maintaining the “hold” rating, the new target price is HK$2.69, based on 9.1 times the price-earnings ratio for FY20. Net profit for FY19 is in line with our expectations for FY19. Maple Leaf Education's revenue increased 17.1% year over year to RMB 1.57 billion, slightly lower than our expectations. This is mainly due to the high school business being dragged down, and its revenue fell 3% year over year to 515.7 million yuan, mainly due to the decline in the birth rate in 2003 and the intensification of competition at Maple Leaf High School in Dalian. Other businesses, such as primary schools, continued to maintain strong growth. Primary school business revenue increased 45% year over year to 451.6 million yuan. Operating profit was 501.6 million yuan (up 17% year on year) and net profit was 656.8 million yuan (up 21% year on year), in line with our expectations. This performance reflects that although the company has acquired several schools with low profit margins, the overall profit margin has remained stable. School utilization increased 3.7 percentage points to 68.3% year over year, as the company acquired two schools with high utilization rates in FY19. In FY19, student enrollment surged 23.6% year over year. Plans to establish additional schools are progressing smoothly while seeking overseas mergers and acquisitions. In FY19, Maple Leaf Education operated 95 schools, of which 13 new schools were added; 8 of these were kindergartens. It is expected that in FY20, China will open 4 schools and acquire 1 K-12 international school in Southeast Asia, so Maple Leaf will operate 100 schools in FY20, while the new schools will bring in 4,800 student places, bringing the total number of students to 65,200. However, with the addition of schools, the number of students that can be accommodated will be more obvious in FY21. In terms of overseas expansion, the company's plans to open one school each in Canada and Singapore in FY21 are still progressing smoothly. Maple Leaf is also seeking more overseas mergers and acquisitions because policy risks outside of China are lower. Maple Leaf has a strong balance sheet and has the resources needed for mergers and acquisitions. Endogenous growth is expected to drive revenue and profits. In addition to increasing schools and expanding existing student life (one school in Wuhan will add 1,500 places), Maple Leaf also sees more room to increase revenue and profit. Raising tuition fees will be a key measure because with other international school operators, Maple Leaf Education School's average tuition fees are still low. In the short term, an easier option to implement is to convert domestic courses from purchased schools (such as a school in Luzhou) to international courses, which will help companies charge higher fees. Reforming the curriculum to gain recognition from more international institutions Maple Leaf has also invested significant resources in converting the British Columbia curriculum to the Maple Leaf World School curriculum. This will enable students to be accepted to more of the world's top universities, while Maple Leaf will no longer be labeled as a Canada-only international school. We anticipate that this measure will not have a significant financial impact in the short term, but if this reform is effective, it is expected that enrolment rates will increase in the medium term. Despite strong revenue growth, there is still policy uncertainty. After the company announced its FY19 results, we raised our earnings per share forecast for FY20 by 1-2% and raised the target price to HK$2.69, based on 9.1 times the FY20 price-earnings ratio (1.2 standard deviations below the 1-year average). Maintain a “hold” rating. We believe K-12 operators will still face policy risks associated with private education. The main upside risk comes from favorable policies that were announced in 2020.