Goldman Sachs On Chinese Education Stocks: Prefer Private Higher Education To K-12

Following the latest earnings calls by education companies, the prospects of private higher education stocks under coverage seem brighter than that of K-12 stocks, according to Goldman Sachs.

Private Higher Education Schools

Goldman Sachs’ Christine Cho maintained a Buy rating on private higher education stocks China Education Group Holdings Ltd (HK:0839) and China YuHua Education Corporation Limited (HK:6169).

She mentioned that China Education Group and Yuhua were leaders in the Chinese higher education sector and had the ability to further consolidate the market and drive margin expansion.

China Education Group had reported its quarterly results short of expectations, mainly due to a higher number of students enrolled in continuing education programs, which have lower average selling prices, Cho said in the note.

She added, however, that the company had made progress in the newly acquired schools and its long-term growth and consolidation story remained intact.

YuHua’s results beat expectations, driven by strong university growth and margin profiles.

The analyst reduced the price target for China Education Group from 14.60 Hong Kong dollars to 13.5 Hong Kong dollars, while raising for China YuHua Education from 5.10 Hong Kong dollars to 6.30 Hong Kong dollars.

Private Higher Education Schools

Cho downgraded the rating for Bright Scholar Education Holdings Ltd BEDU from Buy to Neutral, while reducing the price target from $10.80 to $9.80. She noted that the company had reported another earnings miss for the fiscal fourth quarter and was facing higher cost pressure from recent acquisitions.

The analyst remained on the sidelines for China Maple Leaf Educational Systems Ltd (HKG:1317), while raising the price target from 2.70 Hong Kong dollars to 2.80 Hong Kong dollars. Although the company reported a revenue miss, its margins were better than expected.

China Maple Leaf Educational Systems had announced an ambitious new five-year plan and a new curriculum, Cho said.

She added, however, that more certainty was needed on the company’s execution on diversifying its revenue stream, improving education quality and increasing capacity utilization.

Price Action

The MSCI Emerging Markets Index slipped slightly to close trading at $260.79 on Wednesday.

Posted In: Christine ChoGoldman SachsAnalyst ColorEducationPrice TargetReiterationAnalyst RatingsGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.