Goldman Sachs to increase education rating to neutral target price of 3.8 dollars

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Beijing time, August 21 Evening News, Goldman Sachs today issued an investment report, the study of the Education Stock (Nyse:xue) rating from "sell" to the "neutral", the target price from 3.0 U.S. dollars to 3.8 dollars.

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

The gross profit margin of the second quarter increased 3.5%, one of the highest in history, which means that the utilization of the teaching center is improving. Coupled with strong third-quarter earnings forecasts and reasonable valuations, we think there is limited room for the fall in the share price of education. The company's share price has risen 47% per cent since we reduced the share price of education to "sell" on December 11, 2012, while the MSCI China Index has fallen by 5%. Mainly thanks to the rise in profitability.

Analysis：

In the second quarter, the Education center reduced two teaching centers, the network of teaching centers was flat, and the revenue increased 18%, which meant the utilization rate of teachers and equipment increased. In the second quarter, revenue gains have identified the limits of guidance expected, mainly thanks to an hourly rate increase of 10% per cent, and a 6% increase in course time. We believe that the normal average selling price trend shows the price advantage in addition to the major education.

Adjustment of performance Expectations: We will learn from the 2013 fiscal year to 2015 fiscal year diluted earnings per share expected to increase by 5% to 10%, billion reflects the utilization of teaching centers and profitability of the promotion.

Valuation: We will learn the big education stock rating from "sell" to "neutral", the target share price from 3.0 U.S. dollars to 3.8 dollars. (Li Ming)