Goldman Sachs reiterates its bid to increase its target price to 37 US dollars.

Beijing time, July 29 Morning News, Goldman Sachs released its research report today, reiterated the "buy" rating for good Future (NYSE:XRS) stocks and raised its target share price from $30 to $37.

The following is the full report:

The source of opportunity

We believe that the Internet will be a big boost for future offline enrolment and profit growth. The company's online platform is evolving into an education-themed social circle, and offline stores are the product of the flow of these flows. In the past, the difficulties in scale expansion were an important cause of the fragmentation of the training coaching market, but we found that a good future online advantage obviously solved the problem. In the past 5 years, the revenue of the good future has increased 5 times times, and the company's brand has also broken through the Beijing market.

In this report, we quantify the opportunities for the next 5 years, and find that the company's network will provide at least 5 times times the potential. Our 12-month target stock price is $37 trillion, which means that 35% of the share price rises. We reaffirm our "buy" rating for the good future.

Catalyst

IDC estimates that the primary and secondary training market accounted for 0.4% of China's GDP in 2013. This spending reached twice times the online market and twice times the online advertising market. Compared to the size of the industry, the market value of the good future is still very low. Over time, we expect market capitalisation to prove a strong brand for the future.

We expect that the Internet will change the training market, mainly to change the sales model, not the training model. For the good of the future, we believe that online channels are a more important tool for attracting users than the final content distribution tool. We expect that in the next 2015 fiscal year revenue will be 40% from the online channel, which mainly through: 1 Network course sales accounted for 4%, 2 by the "Parent help" service online traffic conversion from the offline students, accounting for 36%. We believe that the "parental help" application is critical to driving demand, since: 1 regularly collects data from parents and 2 to guide offline expansion.

Valuation

We are more optimistic about the future's online and market potential, so we will increase the earnings forecast for the next 2016 to 2017 fiscal year by 4% to 5% per share. Accordingly, we will raise our target price for the next 12 months from $30 to $37. This is equivalent to a 0.9 times-fold increase in the city's growth ratio (PEG), with a combined annual growth rate of 28% per share for the 2015 to 2018 fiscal year.

Main risk

Organizational risk caused by excessive expansion. (D-Gold)