Macquarie Research lifted its target price for China Education Group (CEG)(00839) to HK$18.4 from HK$18 and maintained its "outperform" rating.
The research house expects CEG to report a stellar FY2020 earnings result, with revenue and operating profit rising 36% and 55.3%, respectively. For the 2020/2021 school years, the company's enrolment quota increased by 75% to 52,000 because of the consolidation of the Hainan University of Economics, implying there is still potential for student enrolment upside.
Meanwhile, the conversion of Songtian University and Chongqing Translator University into independent colleges has been approved by the local government, and the central government's final approval is awaited; this is likely to come through by year-end or early next year.
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