Deconsolidation of K–9 schools

■ Excluding the contribution of K–9 schools, Yuhua reported FY8/21 revenue of Rmb2.26bn, up 11.2% yoy, and adjusted net profit of Rmb1.3bn, up 37% yoy, above our expectation, mainly due to better margins.
■ We expect FY8/22F top-line growth of 9.1% yoy and net profit growth of 18.6% yoy.
■ Yuhua deconsolidated its K–9 schools starting from this results announcement. In FY8/21, the K–9 segment accounted for about 9.37% of total adjusted net profit.
■ Reiterate Add with new DCF-based TP of HK$4.70.