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Investor Notes - Phillip Securities (HK) Ltd
Past Investor Notes  
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10 Dec, 2020 (Thursday)

            
CHINA GAS HOLD(384)
Analysis¡G
With ever-increasing penetration rate, the customer base of China Gas (384) has been expanding rapidly. Currently, the Group provides natural gas and LPG services to more than 44 million residential, industrial and commercial users. Such customer network has given the Group an enormous potential for conducting value-added activities. As for its core business, from 1 April 2020 to 30 September 2020, the Group secured 32 new piped gas projects in provinces such as Hebei Province, Jilin Province, Hubei Province, Sichuan Province and Henan Province. (I do not hold the above stock)
Strategy¡G
Buy-in Price: $28.50, Target Price: $32.00, Cut Loss Price: $27.00


KERRY LOG NET(636)
Analysis¡G
KERRY LOG NET (00636.HK) is a logistics service provider in Asia, mainly engaged in integrated logistics and international freight business, with more than 400 business points in 35 countries and regions in Asia, Australia, Europe and North and South America. In order to cope with coronavirus, pharmaceutical companies around the world are actively developing vaccines, many of which have gradually shown results, but vaccines are in high demand for logistic, and the process needs to be stored at -70 degrees. The company has extensive experience in the handling medicine and providing solutions for the delivery of medical supplies. It is expected to have an advantage in the business of transporting vaccines.
Strategy¡G
Buy-in Price: $16.90, Target Price: $18.60, Cut Loss Price: $16.00



China Kepei (1890.HK) - 20/21 number of students enrolled up by 58% yoy, Harbin College expected to be fully consolidated in early 2021

Investment Summary

20/21 new student enrollment up by 73% yoy, number of students enrolled up by 58% yoy

The new student enrollment of the company's school in 20/21 academic year was up by 73%, and reached 39 thousand. Within it, the new student enrollment of Guangdong Polytechnic College was 33 thousand (+72.8% yoy), the new student enrollment of Zhaoqing School was 4 thousand (+5.3% yoy). The new student enrollment of Harbin College (Non-consolidated school operated under the Entrustment Agreement), which the company acquired in early 2020, was 2.5 thousand. The students enrolled of Harbin College will be consolidated into the company's overall students enrolled from 2020 onward.

The company has a total of 92 thousand students enrolled in 20/21 academic year, compared with the 50 thousand in 19/20, it was up by 46% yoy. Within it, Guangdong Polytechnic College Undergraduate program has a total of 29.3 thousand students enrolled (+22.8% yoy), Junior college program has a total of 6.3 thousand students enrolled (-7.4% yoy), On-campus adult college program has a total of 7.3 thousand students enrolled, (+52.8% yoy), Off-campus adult college program has a total of 30.6 thousand students enrolled (+105.6% yoy). On the other hand, Zhaoqing School Secondary vocational program has a total of 8.5 thousand of students enrolled (+11.3% yoy). In terms of Harbin College undergraduate program, it has roughly 10 thousand students enrolled. We believe the growth in number of student enrolled was mainly attributed by 1) the increase in enrollment quota of the schools of the Group for the 2020/2021 school year (including the expansion policy in ¡§junior college graduate into undergraduate program¡¨) 2) the increase in student registration rate of Guangdong Polytechnic College and Harbin College and 3) the expansion of the number of student enrollment contributed by Harbin College. Overall, the number of number of student enrollment in 20/21 is in line with our expectation, with just the number of students enrolled for Junior college program slightly below of what we previous expected.

The Harbin College is expected to be fully consolidated onto the company's financial statement in early 2021

The ¡§change in organizer¡¨ was approved by the Ministry of Education recently and it is expected that the company will begin to process the ¡§change in organizer¡¨ before the year end. According to the management, the Harbin College is expected to be fully consolidated onto the company's financial statement in early 2021. Nonetheless, it is slower than our previous expectation, we expected that the full consolidation will take place before the year end. We have adjusted our models according to this. We have taken out the 2020E revenue of the Harbin College from the company's total revenue, and added the 2020E net profit of the Harbin College into other income of the company.

Valuation

We have made adjustments to the above mentioned (lower the junior college program revenue and taken out the 2020E revenue of the Harbin College from the company's total revenue). The 2020/2021/2022 revenue of the company was adjusted to RMB 0.88/1.27/1.46 billion, NP of the company was adjusted to RMB 0.63/0.77/0.87 billion, EPS of the company was adjusted to RMB 0.31/0.38/0.43. We maintain our previous target 2021 PE of 17.7x, slightly adjust our 12-months TP downward to HKD 7.50, which implies 2020/2021/2022 P/E ratio of 21.7x/17.7x/15.7x. We maintain Buy rating. (Market closing price as of 7th Dec) (exchange rate: RMB 0.9/HKD)

Risk:

acquisition not as effective as expected, teaching quality diminished, change of related policies, the number of students increased less than expected

Financials

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Recommendation on 10-12-2020
RecommendationBuy
Price on Recommendation Date$ 5.840
Suggested purchase priceN/A
Target Price$ 7.500
Writer Info
Kevin Chiu
(Research Analyst)
Tel: +852 2277 6514
Email:
kevinchiu@phillip.com.hk

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