China Education Alliance, Inc.
(NYSE Amex: CEU)
(NYSE Amex: CEU)
 | $17.00 |
CEU announced second quarter results that were better than our expectations in just about every metric. With respect to a great quarter, we think sales for the second half of the year will be higher due to seasonality and the increasing penetration of new products. We are also raising our estimate for earnings per share for next two quarters. Given the company’s strong rate of growth in both revenues and earnings, its debt-free balance sheet, we reiterate our Strong Buy recommendation and raise our target price to $17.
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Second Quarter 2009 Earnings scheduled for Wednesday, August 12, 2009 10:00 AM Eastern Time.
To participate in the call please dial (877) 407-0789, or (201) 689-8562 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties may also listen via a live Internet webcast: Listen to webcast
To participate in the call please dial (877) 407-0789, or (201) 689-8562 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties may also listen via a live Internet webcast: Listen to webcast
Value Proposition
The market for CEU's online educational services is 150 million students between age 6 and 18, which represents a $15 billion market. The Chinese government continues to increase its investment in education. The latest Chinese stimulus package invested RMB 40 billion in education and health.
The leader in the China educational sector is New Oriental Education & Technology Group (EDU), which trades at 25 forward P/E. CEU currently trades at a forward P/E of 2x when adjusted for enterprise value. At a 20 forward P/E this stock trades at $10 to $12 — an upside of 300% from current levels.
The market for CEU's online educational services is 150 million students between age 6 and 18, which represents a $15 billion market. The Chinese government continues to increase its investment in education. The latest Chinese stimulus package invested RMB 40 billion in education and health.
The leader in the China educational sector is New Oriental Education & Technology Group (EDU), which trades at 25 forward P/E. CEU currently trades at a forward P/E of 2x when adjusted for enterprise value. At a 20 forward P/E this stock trades at $10 to $12 — an upside of 300% from current levels.
Investment Highlights
- Revenue grew 82.1% year-over-year to $8.1 million in 2Q09.
- Net income grew 95.4% to $3.2 million in 2Q09 from $1.7 million in 2Q08.
- $4.5 million in operating cash flow in 2Q09, representing 155% growth year-over-year.
- Strong balance sheet with $29.3 million in working capital.
- CEU is part owner of the newspaper “Scientific Discovery,” which the Company uses to distribute their educational materials. Approximately 60,000 issues of the newspaper are distributed weekly.
Overview
China Education Alliance, Inc. (CEU) is an educational services company which offers online educational materials for all levels of education as well as on-site training and tutorials to a wide variety of clients including school teachers, university professors, educational officials, and families. CEU provides testing materials, preparation materials, research, study guides, educational audio recordings, and various certification trainings.
The Company offers more than 300,000 exams and test papers for use in elementary schools all the way through the collegiate level. The tests and related materials are available for purchase through their “Famed Instructors Test Paper Store” via their website www.edu-chn.com. CEU provides vocational training, vocational performance evaluation metrics services and employment education via their “Millions of College Students Employment Crossroad” program through which the Company has collaborated with the National Association of Vocational Education of China (NAVEC). CEU also entered into the English Language training business with their recent acquisition of 70% of World Exchanges Inc., a company currently operating five English language schools in China. CEU started trading on the NYSE Amex as of July 20, 2009.
CEU expands its business through acquisition and partnership with major international education institutions. In 2008, the Company acquired a controlling stake of World Exchanges, Inc., a fast-growing English training service provider in China. This acquisition successfully positions the Company to access the English training market in China.
The Company offers more than 300,000 exams and test papers for use in elementary schools all the way through the collegiate level. The tests and related materials are available for purchase through their “Famed Instructors Test Paper Store” via their website www.edu-chn.com. CEU provides vocational training, vocational performance evaluation metrics services and employment education via their “Millions of College Students Employment Crossroad” program through which the Company has collaborated with the National Association of Vocational Education of China (NAVEC). CEU also entered into the English Language training business with their recent acquisition of 70% of World Exchanges Inc., a company currently operating five English language schools in China. CEU started trading on the NYSE Amex as of July 20, 2009.
CEU expands its business through acquisition and partnership with major international education institutions. In 2008, the Company acquired a controlling stake of World Exchanges, Inc., a fast-growing English training service provider in China. This acquisition successfully positions the Company to access the English training market in China.
| 10/13/09 5:13 PM EDT | China Education Alliance Announces Partial Exercise of Over-Allotment Option - PR Newswire |
| 09/29/09 7:30 PM EDT | China Education Alliance Announces Pricing of Public Offering of Common Stock - PR Newswire |
| 09/23/09 7:00 AM EDT | China Education Alliance, Inc. Announces Proposed Public Offering of Common Stock - PR Newswire |
| 09/15/09 8:28 AM EDT | Cantronic Appoints New Chief Financial Officer - Marketwire Canada |
| 09/15/09 8:02 AM EDT | Cantronic Appoints New Chief Financial Officer - Marketwire |
| 09/03/09 11:13 AM EDT | China Education Alliance Announces Participation in Upcoming Financial Conferences - PR Newswire |
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