Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

China Maple Leaf Educational Systems / Equity Bottom-Up

Shares of all Hong Kong listed Chinese private schools plunged on Monday, August 13, with some of them plummeted more than 30% in a day. 
What had happened? The draft for comment of “the Implementation Rules on the Promotion of Private School (Draft for Amendment) (Draft for Approval)” was posted on the website of the Ministry of Justice of China (MOJ) <a href="http://www.moj.gov.cn/government_public/content/2018-08/10/tzwj_38279.html" target="_blank">http://www.moj.gov.cn/government_public/content/2018-08/10/tzwj_38279.html</a> on August 10, last Friday.
Abnormal Re-comment
The legal jargon in the…

Shares of all Hong Kong listed Chinese private schools plunged on Monday, August 13, with some of them plummeted more than 30% in a day. 
What had happened? The draft for comment of “the Implementation Rules on the Promotion of Private School (Draft for Amendment) (Draft for Approval)” was posted on the website of the Ministry of Justice of China (MOJ) http://www.moj.gov.cn/government_public/content/2018-08/10/tzwj_38279.html on August 10, last Friday.
Abnormal Re-comment
The legal jargon in the…

Maple Leaf (1317) – Private Schools Plunged Due to Proposed Law

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for international equity markets, and supports our neutral outlook. We continue to recommend avoiding broad indexed exposure in favor of selectivity. In today’s report we highlight actionable country- and Sector-specific themes within Norway, India, Japan and Australia.

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for international equity markets, and supports our neutral outlook. We continue to recommend avoiding broad indexed exposure in favor of selectivity. In today’s report we highlight actionable country- and Sector-specific themes within Norway, India, Japan and Australia.

Global Ex-U.S. & EM Continue to Point to Risk-Off Environment

APAC IPOs & Placements

Zhen Zhou, Toh

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/27137" target="_blank" data-smartkarma-citation="entities:27137:1">Puxin Ltd (NEW US)</a> is looking to raise up to US$144m in its upcoming IPO. Proceeds will be mostly used for strategic acquisitions with any remaining cash used for general corporate purposes.Adding up all the acquisitions that the company has made since 2015 implies that the company is asking for an IPO valuation that is 4.9x of its total acquisition costs. Even if we assume that the acquisitions from 2015 and 2016 have grown by 5x, investors are essentially paying for a valuation that implies that Puxin can grow its FY2017 acquisitions by 4.8x which seems to be a stretch given the limited track record of the company.In this insight, we will be looking at the company's overall financial performance, examine its acquisitions, compare the company against listed education peers. As usual, we will also run the deal through our ECM framework.

Puxin Ltd (NEW US) is looking to raise up to US$144m in its upcoming IPO. Proceeds will be mostly used for strategic acquisitions with any remaining cash used for general corporate purposes.Adding up all the acquisitions that the company has made since 2015 implies that the company is asking for an IPO valuation that is 4.9x of its total acquisition costs. Even if we assume that the acquisitions from 2015 and 2016 have grown by 5x, investors are essentially paying for a valuation that implies that Puxin can grow its FY2017 acquisitions by 4.8x which seems to be a stretch given the limited track record of the company.In this insight, we will be looking at the company's overall financial performance, examine its acquisitions, compare the company against listed education peers. As usual, we will also run the deal through our ECM framework.

Puxin Education IPO Review - Asking for 4.9x of Company's Total Acquisition Cost Since 2015

<ul class=""><li>Maple Leaf accelerated opening new schools in 1H18 (as of Feb 2018) and we believe Maple Leaf can retain the utilization rate.</li><li>In 1H18, both revenue growth and operating margin reached record high since listing (in 2014).</li><li>Maple Leaf’s stock price has not changed much since our last report, but the peer P/E based upside narrows from 27% to 19%, which suggests Maple Leaf is a good defensive ticker.</li></ul>

Maple Leaf accelerated opening new schools in 1H18 (as of Feb 2018) and we believe Maple Leaf can retain the utilization rate.In 1H18, both revenue growth and operating margin reached record high since listing (in 2014).Maple Leaf’s stock price has not changed much since our last report, but the peer P/E based upside narrows from 27% to 19%, which suggests Maple Leaf is a good defensive ticker.

Maple Leaf (1317 HK) – Achieves Both Aggressive Expansion and Record High Margin

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable stocks within countries that are displaying bullish price and relative strength trends, including Japan, Hong Kong, Italy and Norway.

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable stocks within countries that are displaying bullish price and relative strength trends, including Japan, Hong Kong, Italy and Norway.

Global Equity Strategy: Overweight TOPIX, Hang Seng

China

China Maple Leaf Educational Systems Limited is a Chinese international school operator. The Company operates high schools, middle schools and elementary schools across various Chinese cities.

China Maple Leaf Educational Systems (1317 HK)

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China Maple Leaf Educational Systems (1317 HK)

Maple Leaf (1317) – Private Schools Plunged Due to Proposed Law

Shares of all Hong Kong listed Chinese private schools plunged on Monday, August 13, with some of them plummeted more than 30% in a day. What had...

Ming Lu

Global Ex-U.S. & EM Continue to Point to Risk-Off Environment

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for...

Vermilion Research

Puxin Education IPO Review - Asking for 4.9x of Company's Total Acquisition Cost Since 2015

Puxin Ltd (NEW US) is looking to raise up to US$144m in its upcoming IPO. Proceeds will be mostly used for strategic acquisitions with any...

Zhen Zhou, Toh

Maple Leaf (1317 HK) – Achieves Both Aggressive Expansion and Record High Margin

Maple Leaf accelerated opening new schools in 1H18 (as of Feb 2018) and we believe Maple Leaf can retain the utilization rate. In 1H18, both...

Ming Lu

Global Equity Strategy: Overweight TOPIX, Hang Seng

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)