Understanding the Market | Some education stocks continue to rise, private higher education selection has further progress, institutions say the sector is expected to welcome significant valuation recovery
Some education stocks rose collectively, with CHINA EDU GROUP up 3.43%, GENCH EDU up 1.91%, CHINA EAST EDU up 1.89%, and XJ INTL HLDGS up 0.92%. YUHUA EDU's Hunan University of Foreign Economic and Trade's selection program has been approved. Cinda Securities pointed out that this progress may promote private higher education selection programs in other provinces, and it is expected that the higher education sector will welcome significant valuation recovery, suggesting attention to related investment opportunities
According to Zhitong Finance APP, some education stocks have collectively risen. As of the time of writing, China Education Group Holdings (00839) is up 3.43%, trading at HKD 3.62; Gench Education (01525) is up 1.91%, trading at HKD 3.20; China East Education (00667) is up 1.89%, trading at HKD 7.53; XJ INTL HLDGS (01765) is up 0.92%, trading at HKD 0.22.
In terms of news, YUHUA EDU's Hunan University of Foreign Economic and Trade has been approved for selection. Cinda Securities pointed out that the peak period for the previous round of selection was in October 2022, when the results of the selection for private colleges in Heilongjiang were announced, with Harbin Huade College under New Higher Education Group and Harbin Petroleum College under China Kepei successfully transitioning to for-profit private schools. The approval of the selection for Hunan University of Foreign Economic and Trade may serve as a reference model for other provinces, and the progress of selection for private higher education in various regions is expected to be promoted.
The firm noted that the higher education sector is likely to welcome a valuation recovery. The previous stagnation in the selection process has been one of the factors suppressing the valuation of the private higher education sector. Although the approval of the selection for Hunan University of Foreign Economic and Trade is a phased progress in the transition to for-profit, it is a glimmer of hope after three years of stagnation. Against the backdrop of a general PE of 3-6x for the private higher education sector, a significant valuation recovery is expected. It is recommended to focus on investment opportunities brought by the valuation recovery in the private higher education sector, such as China Education Group Holdings
