20 2001.HK China New Higher Education Group Limited Loading... : Investor Sentiment and Bull/Bear Views

The author argues China New Higher Education Group trades at a PE of 1.6 because investors dumped all Hong Kong education stocks after China's 2021 Double Reduction policy, even though the company focuses on higher education and vocational training rather than after-school tutoring. The claimed mechanism is a mispricing where cash and cash equivalents alone equal the entire market cap, while consistent earnings growth, ~20% ROE, chairman buying to ~50% ownership, and a potential reinstatement of cash dividends imply a ~19% yield. Main stated risks are regulatory and policy risk, political sentiment, and low liquidity.

The author is fully invested in China New Higher Education Group, arguing the market values it as if it will generate no future earnings at a PE of 1.6 with cash and equivalents equal to the entire market cap. The mechanism is deep-value re-rating: higher education and vocational training were unfairly sold off alongside for-profit tutoring after the 2021 Double Reduction policy, while earnings keep growing at ~20% ROE and debt falls. Catalysts include reinstating cash dividends (historically ≥30% of earnings, implying ~19% yield) and passive fund buying if the price rises; the chairman bought aggressively after the 2024 scrip-dividend drop and now owns ~50%. Main stated risks are regulatory/policy risk, political sentiment and low liquidity.