China Education (0839.HK): US$200m Bond Refinances Maturities; Reiterate Sell/HR

Research evidence excerpt

China Education (0839.HK): US$200m Bond Refinances Maturities; Reiterate Sell/HR

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28 Jun 2026 21:06:31 ET │ 13 pages

China Education (0839.HK)

US$200m Bond Refinances Maturities; Reiterate Sell/HR

CITI'S TAKE

CEG’s balance-sheet read has changed with new information — having

repaid its RMB500m onshore bond in April, CEG has just raised US$200m

of 5.625% bonds due 2029 (net proceeds ~US$198m) for refinancing and Sell / High Risk

general corporate purposes. Offshore financing access is therefore intact, Price (26 Jun 26 16:10) HK$1.65

not closing, though at a markedly higher cost than the 4% RMB bond it

replaces, on borrowings of RMB10.2bn and net gearing of 25.7%; the Target price HK$1.40↓

dividend remains suspended (no FY25 final, no 1H26 interim). We keep from HK$2.21

FY26-28E unchanged from the May reset and cut our target price to Expected share price return -15.2%HK$1.40 from HK$2.21 at a trough ~2.5x 2026E core EPS, from ~4x. At

~0.2x book the stock screens attractive, but a higher-cost, ex-dividend Expected dividend yield 0.0%

balance sheet feeding a structurally lower earnings base is a value trap. Expected total return -15.2%

Reiterate Sell/High Risk; we prefer CEE. Market Cap HK$4,621M

US$589MFinancing access is intact, but more expensive. CEG refinanced rather than ran dry

— the RMB500m onshore bond repaid in April has been replaced by US$200m of

5.625% 2029 bonds. Near-term liquidity risk is therefore lower than the prior read,

but the step-up from a 4% RMB coupon to 5.625% USD raises interest cost on

RMB10.2bn of borrowings, with net gearing still elevated at 25.7% and capex near Price Performance

RMB2.2bn in FY26E. (RIC: 0839.HK, BB: 839 HK)

Earnings are structurally, not cyclically, lower. The effective tax step to ~30% from