We initiate coverage on the GCC Education Sector with two names in focus – Ataa Educational Company (Ataa), and Humansoft Holding Company (Humansoft). While Saudi-based Ataa is a K-12 (kindergarten till 12th grade) private school operator, Humansoft is a Kuwait-based player in the private higher education space. We have used two valuation methodologies (DCF, and relative valuation – P/E, & EV/EBITDA), and applied equal weightage to both the methods to arrive at the target price. • GCC’s expected strong economic growth, improving job market and favorable demographics augur well for the education sector. The GCC region is emerging strongly after the pandemic and is forecasted to clock real GDP growth of over 6% in 2022 (vs. below 3% in 2021). This is leading to an improvement in the job market. Research from a UAE-based recruitment agency Cooper Fitch shows new job creation in the GCC surged 40% YoY in 4Q 2021 while in 2022 every GCC country is expected to post high-single-digit growth in the generation of new jobs. This certainly would lift the earnings capacity of households in the region, thereby boosting their affordability for private education. In addition, a large portion of the GCC population (KSA: ~40%; Kuwait: ~30%) represents young, school and college aged people, and this will grow further with an increase in the overall population, which again is a positive for the education sector. • Developing private education is a priority in Saudi Arabia. Saudi Arabia, being the biggest economy in the GCC, has the largest population (c. 61% of total GCC population, as of 2020) which indicates it has the largest addressable market for the education sector. The Kingdom, though, lags its GCC peers when it comes to the participation of the private sector in education. However, developing a knowledge-based economy and increasing the role of private players in the education sector is a key priority for the government. Under its Vision 2030, the Kingdom aims to more than double enrolments of students in private education to 25% by 2030 vs. its base assumption of 12%. • Ataa to benefit from schools reopening, Humansoft is an attractive dividend story. We have a favorable view on both Ataa and Humansoft for differing reasons. Ataa has significantly increased its portfolio of schools from 13 to 20 inorganically. The company is witnessing an uptick in enrollments and revenue after the restart of physical classes. Profitability, though currently under pressure owing to recent acquisitions and a rise in operational costs, is expected to gradually improve as operations normalize. Humansoft, on the other hand, is likely to witness muted revenue and earnings growth over our forecast period. However, with an average operating margin of 50%, negligible debt, and capex requirements, the company expects to maintain a minimum 70% payout, which at our expected FY22e DPS offers a lucrative yield of ~9% on the current market price.