Gelonghui November 29 | UBS published a report stating that China Education Holdings' performance for the second half of the fiscal year ending August this year fell short of expectations. Revenue increased by 18% in the second half of the fiscal year, lower than UBS and market expectations of 4.5% and 2.2%, respectively. The main reason is that the secondary vocational education business is weak, while the higher education business is progressing smoothly. The adjusted net profit increased by 3%, lower than UBS and market expectations of 11.5% and 6.7%, respectively. This was due to increased teachers' wages, increased interest expenses, and increased minority shareholders' equity in Hainan schools. Despite the lack of mergers and acquisitions, the bank believes that under the current business pipeline, China Education Holdings' 15% endogenous growth target should be achieved as scheduled. The bank expects China Education's adjusted net profit growth to slow to 12% in the 2024 fiscal year because it believes that the higher costs in FY2023 may continue. The target price was drastically reduced from HK$15 to HK$8.4, maintaining the “buy” rating.