Days Hao Capital maintain good future buy rating target price 21 dollars

Beijing time January 17 Evening news, investment company Days Hao Capital (t.h.capital) issued an investment report today, to maintain a good future stock (NYSE:XRS) "buy" rating, while maintaining the target of 21 U.S. dollar share price unchanged.

The following is a summary of the contents of the report:

Good future will be in the U.S. Eastern Time January 22, 2014 released in the third quarter of fiscal year 2014 earnings. We believe that good future third-quarter results will be at least consistent with Wall Street expectations, even better than Wall Street expectations. This is mainly due to the strong growth of ARPU (average per-user revenue) and the increase in enrollment. We also believe that a good future will give a strong fourth-quarter earnings forecast. Good future most of the revenue from Beijing and Shanghai market, but other cities, revenue rose faster. As the good future business covers only 15 cities, we think there is further room for infiltration. To this end, we continue to maintain a good future stock "buy" rating.

ARPU to boost revenue growth in the third quarter: Wall Street expects revenue from the third quarter to reach $70.3 million trillion, up 23.6% a quarter. Based on our data, we think that the expectation is somewhat conservative. Small-class business is a good future major revenue source, accounting for more than 70% of the total revenue. As a result, small business can serve as an indicator of the company's overall business. Our data show that the number of students in the third quarter is at least more than 269,000, down 23% on the chain, better than our expected decline of 25.5%. At the same time, small class ARPU rose 19% to 263 dollars a quarter, which was much higher than our expected 2.5%. To sum up, coupled with revenue from "1 to 1" and the Internet business, we believe that the future third-quarter revenue will be higher than Wall Street expectations. Driven by revenue growth, we think the third-quarter quarterly earnings will also exceed Wall Street's expected $0.11 trillion.

The winter course is expected to be strong for the quarter: our data suggest that a good future winter course will be popular, which means the future is likely to give a strong fourth-quarter performance forecast. We expect the number of small-class students to grow by more than 80% a quarter, mainly thanks to the performance of cities outside Beijing and Shanghai. We expect that in the fourth quarter, the number of small classes in cities outside Beijing and Shanghai will grow by more than 200%, accounting for 50% of the total for the future, compared with 23% in the first quarter of the 2014 fiscal year. Therefore, we believe that the good future of the forthcoming fourth quarter revenue is expected to be higher than the Wall Street expected 78.9 million U.S. dollars, that is, the quarter-on-quarter growth of 12.4%.

Valuation: We continue to maintain a "buy" rating for the future stock, while maintaining a 21 dollar target share price unchanged.