The largest private university in Shanghai; the location has a strong demand for higher education
Main advantages: located in Shanghai, excellent performance and good reputation
Cover the target price of HK $9.10 for the first time
The largest private university in Shanghai. Shanghai Jianqiao Education Group Co., Ltd. (referred to as "Jianqiao") is the operator of Shanghai Jianqiao College ("school"). According to the Frost Sullivan report, with 17808 full-time students as of September 30, 2018, the school is the largest private university in Shanghai, with a market share of 15.7% in the entire Yangtze River Delta region. and it is the largest private university in the Yangtze River Delta region with the largest number of full-time students in the 2018 academic year. As of September 30, 2019, the number of full-time students in the school has further risen to 19857.
It is located in a first-tier favorable city with high educational demand. Shanghai Jianqiao College is located in Shanghai, a favorable first-tier city. We think this is a decisive advantage because the financial center status of first-tier cities provides rich and attractive job opportunities for graduates, thus attracting students from all over the country at the same time.
Excellent past performance and strong earnings growth. In addition to the good industry ranking and recognition, we believe that Shanghai Jianqiao University's good performance in achieving growth and its high initial employment rate prove the quality of its education and will support the sustainable growth of its business. We expect the adjusted net profit of the company's FY19F and FY20F to grow by 55% and 37% to 1.81 and 248 million yuan respectively compared with the same period last year. Our earnings growth forecasts are based on steady increases in student enrollment and average tuition fees, as well as profit margin growth and robust income growth as a result of improved scalability.
For the first time, it is rated better than the big market and the target price of HK $9.10. For the first time, we cover the Bridge Construction Institute and give it an above-market rating, with a target price of HK $9.10, based on a price-to-earnings ratio of 13.5 times for fiscal year 2020. Our target multiple is equivalent to a 10% premium on the average valuation of the education industry. We believe that this is due to Jianqiao College's leadership in Shanghai and strong profit growth. Investment risks include: (1) regulatory risks; (2) risks related to student enrollment quotas; and (3) expansion risks.