CMB International Securities (CMBIS) lowered its target price for Wisdom Education (06068) to HK$5.61 from HK$6.38 and maintained its "buy" rating.
The research house said Wisdom's 2020/21 school year total student enrollment for self-operated schools +12% to around 67,162. The figure was in line but the student mix was less favorable than expected.
CMBIS thinks the Wisdom's low valuation is attractive and unjustified. The recent share price volatility was due to policy concerns about VIE (variable interest entity) structure and the not-for-profit nature of compulsory education. It believes such concerns have been factored in because they were addressed in the draft for the comments version of the Law in November 2018. CMBIS lowered its FY2021/22 net profit forecasts by 3%/7% as it trimmed revenue estimates by 1%/3%.
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