Edvantage Reports In-Line Full-Year Results, but Shift From Cash Dividend Is Disappointing

Edvantage’s full-year fiscal 2022 results are in line with our and the market’s expectations. But shares tumbled as the company chose to offer a script dividend in place of a regular cash dividend. We are disappointed with the change in dividend distribution. We think Edvantage could afford a regular cash dividend. We keep our fair value estimate of HKD 6.10 per share. The shares closed at a 68% discount to our fair value estimate as of Nov. 28. The market capitalization is about the same as the sum of our five-year Stage I discounted cash flow. We think the shares are deeply undervalued. However, we expect share prices to remain subdued in the near term given negative market sentiment.