DBS Group Research initiated coverage on Edvantage Group (00382) with a "buy" rating and a target price of HK$7.9.
The research house expects Edvantage to post 32% earnings CAGR for FY2020-22, among the highest of its listed peers. Growth will be driven by (1) over 20% revenue growth from capacity expansion, enrolment quota increase and tuition hike; and (2) 2ppt margin
improvement each year as new campuses mature.
DBS is more optimistic on the group's growth outlook, given that (1) DBS expects a higher registration ratio for schoolyear 2020/21 as fewer students study overseas due to the COVID-19 pandemic; and (2) non-degree training program is growing fast at 50%, adding value to Edvantage with little additional costs.
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