Small motorcycle to maintain a good future overweight rating target price of 48 U.S. dollars

Beijing time August 5 Evening News, JPMorgan released a study today to maintain a good future (NYSE:XRS) stock "overweight" rating, and the target share price from 42 U.S. dollars to 48 dollars.

The following is the full report:

The future is China's leading provider of education and training services, focusing on the primary and secondary education market. In the past 3 months, the good future share price has risen 36%, while the Hang Seng China Business Index rose 14%. However, according to our new target share price, the good future share price still has 50% rising potential. In this report, we analyze the potential for future growth to support our view that the number of good future learning centers will reach 16% to 21% annually by 2020. We maintain an "overweight" rating on good future stocks and raise our target share price to $48 trillion.

Faster growth rates and increased profitability

Our main view of the good future is that the current low penetration rate at the Learning Center and the strong middle and high school training market will help to penetrate more cities at a faster rate and at a lower cost than most market watchers expect. We have also seen more evidence that, despite the cost of new tablets and Internet projects, the profit-and-tax profit margins (EBIT) for the next 2015 fiscal year will grow with revenue. We have a good outlook for the next 2015 fiscal year and the 2016 fiscal year, the expected earnings per share were 16% and 14% higher than the average analyst forecast.

Raise profit expectations and target share prices

In view of the faster growth rate of the learning center, we will increase the adjusted net profit forecast for the next 2015 fiscal year and the 2016 fiscal year respectively by 1.1% and 5.6%. We maintain the previous view that the profit margin for fiscal year 2015 will increase modestly, from 18.4% to 19% in fiscal year 2014 EBIT. Based on the DCF valuation method, our December 2015 target share price was $48 trillion, higher than the previous $42.

Valuation, target share price and risk

In terms of profit forecasts for the 2015 calendar year, the current forward-looking earnings ratio of the future is 23.7 times times higher than the average for Asian companies of 10%. Our December 2015 target share price of 48 US dollars is 28 times times the next 12-month forward earnings ratio, which is lower than the long-term profit growth, that is, the annual compound growth rate of earnings per share in the 2014 fiscal year to 2016.

The key risks to achieving this target share price include the growth of wage and rental costs, and competition from Internet content providers and other knowledge providers. (D-Gold)