The company's 1H19 achieved steady growth, with a mid-term dividend rate of over 40%: Huali University Group announced results for the six months ended February 29, 2020, with revenue of 394 million yuan, up 15.9% year on year; gross profit of 226 million yuan, up 19.1% year on year; net profit of 138 million yuan, up 22.6% year on year; adjusted net profit was 161 million yuan, up 24.8% year on year. The adjustment items are listing expenses, discounted interest expenses due to related parties, and fair value income from invested properties. The company's basic profit per share is 0.13 yuan, and the proposed interim dividend is 0.051 yuan per share. The interim dividend rate is about 44.6% of the current net profit. Undergraduate enrollment is growing steadily, and the promotion policy favors the company: In addition, the company registered 5,545 undergraduate students in the 2019/2020 academic year (including a special insert). Benefiting from the government's policy to expand enrollment for higher education this year, the company has now obtained 1,400 enrollment plans. There were 5,530 new students who registered for junior college. In the same year, the College of Technicians enrolled a total of 3,040 new students, of which 1,110 were enrolled in the Higher Vocational School. Starting in the 2018/2019 academic year, the company focused on junior high school graduates. Since then, students have mainly been junior high school graduates. Students can complete technical and high technical courses at the Technician College, and can also choose to participate in the adult college entrance examination to obtain a diploma from Huali Vocational College. Rooted in the rich soil of the Greater Bay Area, long-term development is worth looking forward to: as of February 29, 2020, the Group has 1,876 acres of land with a total construction area of about 1 million square meters (including projects under construction). The Zengcheng and Yunfu campuses currently have a student capacity of about 37,000, the Zengcheng Campus's campus occupancy rate is 93.1%, and the Yunfu Campus's student capacity utilization rate is only about 25%. Currently, the company is still actively expanding and constructing new campuses in Zengcheng and Jiangmen, increasing the student capacity by about 6,100/8,100, and will be completed and put into use in the second half of 2020 and the end of August 2021. The company's sufficient reserves in terms of land and the construction of new and old campuses guarantee the company's long-term stable endogenous growth. Furthermore, the company said it will seize the window period for the transition of independent colleges, actively promote the implementation of extended mergers and acquisitions projects, and not rule out the possibility of overseas mergers and acquisitions or cooperation. The target price is HK$5.27, maintaining the buying rating: Benefiting from the company's unique location in the Greater Bay Area, sufficient land and building reserves, and the company's past experience in running schools, the company can be expected to grow steadily over a long period of time. Based on predictions that do not take into account Huali Vocational College's upgrade to undergraduate and Huali University's decoupling, we adjusted the company's target price to HK$5.27, corresponding to the 2020/2021 forecast PE of 19.9x and 14.3x, respectively, an increase of 78.0% from the recent closing price.