Hailiang Education Group (NasdaqGM:HLG) - Share price, News & Analysis

Q: What is the Fair Price of HLG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

HLG ($13.49) is trading below our estimate of [[fair value]] ($138.25)

HLG fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	4/6
Financial Health	4/6
Dividends	0/6

HLG Stock Overview

Hailiang Education Group Inc. provides K-12 educational and management services in the People’s Republic of China.

Rewards

Trading at 90.2% below our estimate of its fair value

Earnings grew by 38% over the past year

Risk Analysis

Latest financial reports are more than 6 months old

Hailiang Education Group Competitors

American Public Education

NasdaqGS:APEI

US$295.5m

Vitru

NasdaqGS:VTRU

US$465.3m

Universal Technical Institute

NYSE:UTI

US$233.0m

Lincoln Educational Services

NasdaqGS:LINC

US$185.6m

Price History & Performance

Summary of all time highs, changes and price drops for Hailiang Education Group
Historical stock prices
Current Share Price	US$13.49
52 Week High	US$39.50
52 Week Low	US$9.28
Beta	-0.050
1 Month Change	-0.031%
3 Month Change	9.11%
1 Year Change	-64.34%
3 Year Change	-78.20%
5 Year Change	2.62%
Change since IPO	49.84%

Recent News & Updates

Jul 13

Hailiang Education gets 2 deficiency notices from Nasdaq

Hailiang Education (NASDAQ:HLG) said Wednesday it received 2 deficiency notices from Nasdaq as it is not in compliance with continued listing rules. This is because HLG failed to timely file its semi-annual financial information for the half year ended Dec. 31 with the SEC and failed to hold an annual shareholder meeting within 12 months of the end of its fiscal year. For its H1 2022 financial report, HLG has 60 days from the date of the notice to submit a plan to regain compliance. If Nasdaq accepts the plan, it may grant an exception till Dec. 27 to regain compliance. For the 2022 AGM, HLG has 45 days to submit a plan to regain compliance. If the plan is accepted, Nasdaq may grant HLG an extension till Dec. 27 to regain compliance. HLG failed to timely file the financial report and hold the AGM as it has been focusing on its going private deal.

Dec 29

Hailiang Sees The Writing On The China Blackboard

China's sweeping private education reform, known locally as “double reduction,” included the banning of after-school tutoring on weekends and public holidays, and the requirement that all private sector operators get official education licenses and run on a non-profit basis. Hailiang was relatively less affected by recent government-led cleanup of private education sector, but still faces large uncertainties. Hailiang Education Group announced last week that it has received a buyout offer from a group led by its founder Feng Hailiang.

Shareholder Returns

	HLG	US Consumer Services	US Market
7D	0.9%	-2.2%	1.1%
1Y	-64.3%	-31.8%	-13.0%

Return vs Industry: HLG underperformed the US Consumer Services industry which returned -31% over the past year.

Return vs Market: HLG underperformed the US Market which returned -12.9% over the past year.

Price Volatility

Is HLG's price volatile compared to industry and market?
HLG volatility
HLG Average Weekly Movement	6.4%
Consumer Services Industry Average Movement	10.3%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.1%
10% least volatile stocks in US Market	3.2%

Stable Share Price: HLG is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: HLG's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1995	2,252	Junwei Chen	https://www.hailiangedu.com

Hailiang Education Group Inc. provides K-12 educational and management services in the People’s Republic of China. The company operates 14 affiliated schools; and 27 managed schools. It offers K-12 student management, high school curriculum education, and operation and management services, including branding, academic management, education resources, school culture, admission, finance, human resources, procurement, IT, internal audit, and property and logistics management services, as well as after-school enrichment, accommodations, and transportation services.

Hailiang Education Group Fundamentals Summary

How do Hailiang Education Group's earnings and revenue compare to its market cap?
HLG fundamental statistics
Market Cap	CN¥2.35b
Earnings (TTM)	CN¥483.05m
Revenue (TTM)	CN¥1.38b

4.9x

P/E Ratio

1.7x

P/S Ratio

Is HLG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
HLG income statement (TTM)
Revenue	CN¥1.38b
Cost of Revenue	CN¥728.59m
Gross Profit	CN¥647.20m
Other Expenses	CN¥164.16m
Earnings	CN¥483.05m

Last Reported Earnings

Jun 30, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	18.74
Gross Margin	47.04%
Net Profit Margin	35.11%
Debt/Equity Ratio	2.1%

How did HLG perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is HLG undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HLG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for HLG. This is calculated by dividing HLG's market cap by their current preferred multiple.
What is HLG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥2.35b

HLG key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.2x
Enterprise Value/EBITDA	2.2x
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does HLG's PE Ratio compare to its peers?

HLG PE Ratio vs Peers

The above table shows the PE ratio for HLG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	18.5x
APEI American Public Education	19.7x	11.3%	US$295.5m
VTRU Vitru	32.7x	35.5%	US$465.3m
UTI Universal Technical Institute	12.3x	30.7%	US$233.0m
LINC Lincoln Educational Services	9.4x	5.9%	US$185.6m
HLG Hailiang Education Group	4.9x	n/a	US$347.6m

Price-To-Earnings vs Peers: HLG is good value based on its Price-To-Earnings Ratio (4.9x) compared to the peer average (18.5x).

Price to Earnings Ratio vs Industry

How does HLG's PE Ratio compare vs other companies in the US Consumer Services Industry?

Price-To-Earnings vs Industry: HLG is good value based on its Price-To-Earnings Ratio (4.9x) compared to the US Consumer Services industry average (21.2x)

Price to Earnings Ratio vs Fair Ratio

What is HLG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HLG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	4.9x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate HLG's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of HLG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HLG ($13.49) is trading below our estimate of fair value ($138.25)

Significantly Below Fair Value: HLG is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

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Future Growth

How is Hailiang Education Group forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

40.3%

Forecasted Consumer Services industry annual growth in earnings

In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Hailiang Education Group has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.

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Examine whether Hailiang Education Group is trading at an attractive price based on how much it is expected to earn in the future, and relative to its industry peers and the wider market.

Past Performance

How has Hailiang Education Group performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

38.0%

Last years earnings growth

Earnings and Revenue History

Quality Earnings: HLG has high quality earnings.

Growing Profit Margin: HLG's current net profit margins (35.1%) are higher than last year (34.1%).

Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if HLG's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: Insufficient data to compare HLG's past year earnings growth to its 5-year average.

Earnings vs Industry: HLG earnings growth over the past year (38%) exceeded the Consumer Services industry 2.9%.

Return on Equity

High ROE: HLG's Return on Equity (21.7%) is considered high.

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Financial Health

How is Hailiang Education Group's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: HLG's short term assets (CN¥849.7M) do not cover its short term liabilities (CN¥1.0B).

Long Term Liabilities: HLG's short term assets (CN¥849.7M) exceed its long term liabilities (CN¥35.4M).

Debt to Equity History and Analysis

Debt Level: HLG has more cash than its total debt.

Reducing Debt: Insufficient data to determine if HLG's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: HLG's debt is well covered by operating cash flow (1961.6%).

Interest Coverage: HLG earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is Hailiang Education Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate HLG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate HLG's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if HLG's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if HLG's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as HLG has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

5.0yrs

Average management tenure

CEO

Junwei Chen (30 yo)

2.17yrs

Tenure

Mr. Junwei Chen serves Chairman of the Board at Hailiang Education Group Inc. since June 23, 2020. He serves as Chief Executive Officer and Director at Hailiang Education Group Inc. since June 23, 2020. He...

Leadership Team

Experienced Management: HLG's management team is seasoned and experienced (5 years average tenure).

Board Members

Experienced Board: HLG's board of directors are considered experienced (5.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/08 00:00
End of Day Share Price	2022/08/08 00:00
Earnings	2021/06/30
Annual Earnings	2021/06/30