Offer to acquire Hong Kong GEM company Huangping: On January 29, 2020, the company announced an offer of HK$0.54 per share to acquire 800 million shares of Hong Kong GEM company Huangping (8105.HK) at a total acquisition cost of HK$432 million. The subject of the acquisition was a school and campus located in Malaysia covering 2 acres of land. As of the announcement date, 75% of Huangping's majority shareholders have made an irrevocable sale commitment. The company still needs to acquire at least 15% of the remaining shares within 21 days from the date of acquisition to reach a total of 90% or more of the shares before it can implement compulsory privatization of the subject matter of the acquisition. If more than 90% shareholding has not been achieved within 21 days, it will be extended for at least 14 days depending on the circumstances. Currently, the merger date for this acquisition is uncertain. If the company still does not obtain more than 90% of Huangping's shares after 4 months, the takeover offer has been declared a failure. The target of the acquisition is K-12 and higher education schools operating in Malaysia: The target school was built in 2011, and the first phase of the acquisition built a campus with a capacity of 2,600 people in 2015. It currently has 1,000 students and offers K-12 A-level courses and higher education courses. In the 2019 fiscal year ending 2019630, the target recorded revenue of 30.998 million ringgit (approximately HK$58.9 million), with a net profit margin of 6.9%. The 2018 listing of the subject matter of the acquisition was still affected by listing expenses. We believe that the net interest rate of the target could be raised to 10%-15% when it was not listed in 2016. The net assets underlying the acquisition were HK$145 million, and the purchase consideration was equivalent to 3 times PB. The investment cost of the target school is HK$400 million, and the gross margin of the target acquisition is about 50%. It is estimated that there is still room for growth in the revenue and profit of the subject matter of the acquisition. Maintaining the “buy” rating and maintaining the target price at HK$3.8, overseas acquisitions will continue to be carried out to build the Southeast Asia region: In 2016, the company acquired a property in Singapore for rent and opened a K-12 school in the future. This acquisition added new members to the company's establishment in the Southeast Asia region. It is expected that the company will continue to build the Southeast Asia region through acquisitions, etc., while also exporting the Maple Leaf education curriculum system, improving Maple Leaf's global layout, and reaching the company's 65-year plan target of 100,000 domestic students and 10,000 overseas students. We expect the company's revenue for the 2020-2022 fiscal year to be RMB 18.0, 20.9 and RMB 2.41 billion (same below), with year-on-year increases of 14.7%, 16.0% and 15.2%, respectively; adjusted net profit is 7.8, 8.9 and 1.02 billion yuan, respectively, up 12.7%, 14.5% and 14.1% year-on-year respectively. Maintain the company's “buy” rating and maintain the target price of HK$3.8, corresponding to PE of 13, 12, and 10 times for the 2020-2022 fiscal year, respectively. The impact of the novel coronavirus outbreak on the company is limited. Risk warning: 1) changes in national education policy; 2) expansion processes such as company acquisitions and self-construction did not meet expectations; 3) student and parent satisfaction with teaching quality declined; 4) VIE structure policy risks.