Understanding the Market | CHINA EDU GROUP fell over 8% in the late trading session, peer schools approved to transition to for-profit, HSBC stated that the company's schools have not made substantial progress yet

China Edu Group's stock fell over 8% in the late trading session, down 8.01% to HKD 3.33, with a trading volume of HKD 184 million. HSBC released a research report stating that the recent rise in China Edu Group's stock price was due to its peer, YuHua Education, receiving approval for its schools to transform into profit-making institutions. The bank believes this situation reflects that the approval process for transforming into profit-making schools may accelerate, but the process is complex and time-consuming, involving multiple departments, and progress in individual regions does not necessarily indicate that other regions will accelerate simultaneously, as there are differences in approval timelines across locations. Currently, there has been no substantial progress for the schools under China Edu Group. The bank expressed an optimistic outlook on the transformation progress of YuHua Education's schools, which slightly improves the industry's prospects. After the recent rise in stock prices, China Edu Group's valuation remains low, which should help prevent further declines in stock prices. However, short-term profit margins are under pressure, and with revenue growth potentially slowing and dividends being suspended, this may limit further upward movement in stock prices; maintaining a "Hold" rating, with the target price raised from the previous HKD 2.75 to HKD 3.5