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    3978   KYG2121W1024

CHINA BESTSTUDY EDUCATION GROUP

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China's private education firms brace for hit from new rules

07/25/2021 | 09:48pm EDT

(.)

HONG KONG, July 26 (Reuters) - China's private education firms are bracing for a "material" hit to their operations after Beijing announced new rules barring for-profit tutoring in core school subjects to ease financial pressures on families.

News of the rule changes on Friday sent shockwaves through China's $120 billion private tutoring sector and triggered a massive sell-off in the shares of companies including U.S.-listed TAL Education Group and Gaotu Techedu .

In early Monday trading on the mainland, the education industry sub-index dropped 7%, while shares of New Oriental Education & Technology Group Inc fell 40%.

Under the new rules, all institutions offering tutoring on the school curriculum will be registered as non-profit organisations, and no new licences will be granted, according to an official document.

TAL said in its statement on Sunday that it expects the new rules to have "material adverse impact on its after-school tutoring services ... which in turn may adversely affect" its operations and prospects. It did not elaborate.

TAL's New York-listed shares plunged 71% on Friday.

New Oriental, Koolearn Technology Holding Ltd, Scholar Education Group, and China Beststudy Education Group made similar statements on Monday.

China's for-profit education sector has been under scrutiny as part of Beijing's push to ease pressure on school children and reduce a cost burden on parents that has contributed to a drop in birth rates.

"The company is considering appropriate compliance measures to be taken, and expects such measures to have material adverse impact on its afterschool tutoring services...," New Oriental Education said in a statement.

Online education services provider Koolearn, which expects its after-school tutoring services to be affected, said it will comply with the relevant rules when providing educational services.

Scholar Education said authorities had yet to provide details around the implementation of the rules and there were uncertainties as to when and how such rules will become specifically applicable to the group.

"I personally have always stayed away from the education sector as regulations have been changing erratically for many years," said Dave Wang, portfolio manager at Nuvest Capital in Singapore.

"But the broader view is that the Chinese government has always been more particular on sectors that have widespread social implications. The increasing difficulty for investors and companies is that the boundary seems to be extending ... (and) no one knows what might be next."

In May, China said it would allow couples to have up to three children, from two previously.

"The company is in communication with the regulatory authority and will make appropriate adjustment of its business model whenever needed to ensure the compliance with the new policies under the opinions," China Beststudy Education said. (Reporting by Sumeet Chatterjee and Donny Kwok; Additional reporting by Tom Westbrook in Singapore Editing by Vidya Ranganathan & Shri Navaratnam)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CHINA BESTSTUDY EDUCATION GROUP 3.57% 0.58 End-of-day quote.-80.67%
KOOLEARN TECHNOLOGY HOLDING LIMITED -0.73% 4.09 End-of-day quote.-85.34%
MSCI SINGAPORE (GDTR) -1.00% 6527.826 Real-time Quote.12.58%
SCHOLAR EDUCATION GROUP 5.41% 1.56 End-of-day quote.-88.00%
TAL EDUCATION GROUP 2.75% 4.48 Delayed Quote.-93.74%
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08/31China Beststudy Education Group Reports Earnings Results for the Half Year Ended June 3..
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08/05MARKET CHATTER : Beijing to Fast-Track Application of New Tutoring Rules
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07/29China Starts Crackdown on School Teachers Offering After-School Tutoring Services
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07/26Hong Kong Stocks Drop to Seven-Month Low; Tutoring Companies Suffer Heavy Sell-off
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07/26China Unveils Sweeping Education Overhaul, Prompting Selloff of Tutoring Stocks
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07/26China's new private tutoring rules put billions of dollars at stake
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07/26CHINA BESTSTUDY EDUCATION : Shares Plunge 39% on Beijing's Clampdown on Tutoring Sector
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07/25China's private education firms brace for hit from new rules
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Financials
Sales 2021 2 101 M 325 M 325 M
Net income 2021 164 M 25,3 M 25,3 M
Net Debt 2021 - - -
P/E ratio 2021 2,32x
Yield 2021 -
Capitalization 358 M 55,3 M 55,3 M
Capi. / Sales 2021 0,17x
Capi. / Sales 2022 0,14x
Nbr of Employees 7 759
Free-Float 41,3%
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Number of Analysts 1
Last Close Price 0,48 CNY
Average target price 3,03 CNY
Spread / Average Target 530%
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Managers and Directors
Jun Jing Tang Chairman & Chief Executive Officer
Hong Zhang Zheng Chief Financial Officer
Peng Xue Independent Non-Executive Director
Yu Long Independent Non-Executive Director
Ying Min Wu Independent Non-Executive Director