China Education Group Saw Robust Organic Growth in Student Admissions

All the seven undergraduate schools under narrow-moat China Education Group, or CEG, have recorded robust growth in student admissions for the 2022/2023 school year. The impressive admission numbers reinforce our view that CEG can achieve decent organic growth. We keep our estimates for revenue and net income to grow at 13% and 11% CAGR from 2022 to 2026, respectively. Investor sentiment for the sector remains weak and CEG’s shares are trading at a 53% discount to our HKD 13.20 fair value estimate. We anticipate CEG should announce for-profit classification of its Jiangxi University of Technology toward end-2022 and we think this will help boost confidence.