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31 May, 2018 (Thursday) |
 
ZHONG AO HOME(1538)
Analysis：
Zhong Ao Home Group (1538) is principally engaged in property management business which includes the provision of property management services, sales assistance services and other services and sales of goods. As of 31 December 2017, the Group had expanded its presence to 43 cities in China where it was contracted to manage a total of 500 residential properties and non-residential premises such as commercial or government buildings with an aggregate contracted GFA of 66.7 million sq.m.. During the year ended 31 December 2017, the Group recorded revenue of RMB977.6 million, representing an increase of 53.9% over the year 2016. Net profit attributable to shareholders surged 1518% to RMB90.54 million. Based on the EPS of RMB0.113 and final dividend of HK$0.05, its share price is trading at less than 7 times historical P/E and yielding more than 5%. (I do not hold the above stock)
Strategy：
Buy-in Price: $0.92, Target Price: $1.01, Cut Loss Price: $0.88
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MAPLELEAF EDU(1317)
Analysis：
Maple Leaf Education is operating bilingual private schools and preschools in the PRC under the “Maple Leaf” brand, focusing on high schools that offer dual-diploma curriculum (British Columbia curriculum and Chinese curriculum) and bilingual education within the PRC. The revenue and net profit in 2017 were RMB 1.08 billion and 0.413 billion, with 30.5% and 34.5% YoY% growth. The student enrollment is 29,991 as of 31/3/2018. As the middle class is rising and the consumption is upgrading in China, those companies providing excellent education should be able to ride on the trend. Among 1,807 high school graduates in 2017, 46 students has admitted the top 10 University in the world, with 1,018 students admitted top 100 university compiled by Maple Leaf Education, implying a incredible education quality. Besides, the company keeps acquiring recently, such as 89 million RMB for 55% of ESIA, and 0.15 billion RMB for 3 boarding schools in Haikou, a kindergarten, and a youth service center. It is believed that those acquired schools can increase their profit by enjoying the reputation of Maple Leaf Education.
Strategy：
Buy-in Price: $13.50, Target Price: $15.00, Cut Loss Price: $12.80
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Report Review of May. 2018
Sectors: Air, Automobiles (ZhangJing), Healthcare & Consuming (Eurus Zhou), TMT, Education and Financial (Terry Li) Automobile & Air (ZhangJing)This month I released 4 reports including 3 updated reports and 1 NDR takeaways: GreatWall Motor (2333. HK), BYD (1211. HK) , Geely (175. HK), FDG (729. HK). Among which , we prefer Geely.There are four models of Geely with a monthly sales volume of over 10,000 in 2017, two of which reported a sales volume of over 20,000. Since the beginning of 2018, the main models remain attractive and the newly launched models are gaining popularity step by step. It is expected that the number of models with a monthly sales volume of over 10,000 will increase to 5 or 6, and the number of models with a sales volume of over 20,000 will increase to 3. We believe that Geely will continue to be benefited from the dividends generated by successful strategies. The Company shows advantages in epitaxial leapfrog development and export market. Several times of increases in the management's holdings also demonstrate its considerable confidence.In terms of valuation, we increase the profit forecast, adjusting our target price to HK$36, equivalent to 18/13 P/E ratio in 2018/2019, and we shall give the rating of Buy. Healthcare & Consuming (Eurus Zhou)This month I released 3 equity reports, including SPH (2607HK), CSPC (1093HK) and Netdragon (777HK). We tend to highly recommend Netdragon 777HK) and SPH (2607HK). Netdragon, a leading online education firm, announced the acquisition of EDMODO (a global education online platform to K-12 schools) with a consideration of USD137.5mn. We are positive on the synergies among Netdragon's current products (education software and hardware) and EDOMODO's large user base, which is believed to form great monetization potential in future. For SPH, it announced FY17&18Q1 results, beat our expectation. We see that momentum of manufacturing maintains strong and growth of retail business steps up. We highlight that consistency evaluation provides future driver. China government published policies to facilitate the replacement of original imported drug with generic drug. It indicates that qualified generic drugs should be included into public purchase lists and be paid just as original drugs. We highlight that passing the evaluation will increase sales volume and ASP in future. Education (Terry Li)I released a report on China New Higher Education Group in this month. The group is a leading higher education operator in China, with six schools in Yunnan, Guizhou, Xinjiang, Heilongjiang, Hubei, Henan, and one under construction in Gansu. Thanks to the robust economic growth in China and the universal in higher education, we believe the demand on higher education will become higher. Although the number of candidate for Gaokao has peaked in 2008 due to the low birth rate, some provinces still record increasing candidates for Gaokao, where four out of seven schools for the group are located in such provinces. Thus, we are positive to the growth in student enrollment for the group in the next two or three years. 
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