Bottom line: The online education sector is currently in a teething phase that could last for the next two years, but could offer big potential for investors who can separate the wheat from the chaff.
Big potential in online education?
Today I thought I’d look at some of the major online education stocks to hit the market over the last two years, most turning in a decidedly negative performance that may or may not be justified. The latest of those, Koolearn (HKEx: 1797) stumbled out of the gate late last week with a flat trading debut, and since has posted some minor gains that probably don’t mean too much. (English article)
Koolearn’s anemic performance actually looks quite strong when compared with some of the others that have floated shares over the last two years. Most of those are down moderately to sharply over the last 52 weeks, led by a 67 percent plunge for one called Puxin (NYSE: NEW) and a 55 percent slide for another called Sunlands (NYSE: STG). Read Full Post…
The following press releases and news reports about China companies were carried on October 26. To view a full article or story, click on the link next to the headline.
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Germany Withdraws Approval for Chinese Takeover of Aixtron (Frankfurt: AIXA) (English article)
Oppo, Vivo Pass Huawei in China Smartphone Market in Q3 – Counterpoint (Chinese article)
ChemChina Ready for Concessions to Clinch Delayed Syngenta Deal: Source (English article)
New Oriental (NYSE: EDU) Announces Results for the First Fiscal Quarter (PRNewswire)
Student Loan Specialist Qufenqi Posts 540 Mln Yuan Loss in 2015 (Chinese article)
The following press releases and news reports about China companies were carried on July 29. To view a full article or story, click on the link next to the headline.
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The following press releases and news reports about China companies were carried on April 20. To view a full article or story, click on the link next to the headline.
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Ant Financial Completes Funding Round at $60 Bln Valuation (Chinese article)
China Sovereign Fund to Seek Control of $8 Bln Yum (NYSE: YUM) China Unit (English article)
Asos Closes China Business Under Weight of Alibaba (NYSE: BABA) Competition (English article)
ZTE’s (HKEx: 763) Nubia Smartphone Brand Says to IPO Within 3 Years (Chinese article)
New Oriental Announces Fiscal Q3 Results (PRNewswire)
Bottom line: Pactera is likely to get sold and re-listed in China later this year, while New Oriental is likely to make a domestic listing worth up to $100 million for its Xun Cheng online education in a similar time frame.
Blackstone shops around Pactera
The homeward migration of overseas-listed Chinese firms is moving ahead, with word that privatized IT outsourcing firm Pactera and the online unit of education giant New Oriental (NYSE: EDU) are both potentially eyeing domestic IPOs in the upcoming Year of the Monkey. These stories represent 2 different threads from the larger story of overseas-listed Chinese companies returning home to make new IPOs.
The thread represented by Pactera has seen around 40 US-listed Chinese companies receive privatization offers over the last year from buyout groups hoping to re-list the firms in China at higher valuations. The New Oriental bid represents a second, more recent trend that has seen US-listed category leaders indicate they will keep their primary listings in New York, but then spin off some of their smaller units for separate domestic listings in China. Read Full Post…
The following press releases and media reports about Chinese companies were carried on February 2. To view a full article or story, click on the link next to the headline.
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Youku Tudou (NYSE: YOKU) VP Questioned by Police for Illegal Activity (Chinese article)
New Oriental Proposes China IPO for Xun Cheng, After Tencent Investment (PRNewswire)
Blackstone Shops China Software Firm Pactera to Potential Buyers (English article)
Sinovac (Nasdaq: SVA) Announces Receipt of Proposal to Buy the Company (PRNewswire)
OPPO, Vivo Snap at Apple’s (Nasdaq: AAPL) Heels in China Mobile Market (English article)
Bottom line: Hailiang looks well placed for growth due to its small size, a major new expansion and positioning in the recession-proof education space, which could help to boost its shares that look quite cheap at current levels.
Hailiang builds business in primary education
After a period of neglect due to their low-tech image and overly eager expansion by some, Chinese education stocks appear to be coming back into vogue on growth that looks solid, if not spectacular. On the heels of solid quarterly reports by 2 sector leaders 2 weeks ago, the much smaller and recently listed Hailiang Education (Nasdaq: HLG) has just released its first post-IPO earnings report that shows similar respectable growth. But more intriguing is the potential for growth acceleration, as the company launches a massive new campus and starts to expand its well-regarded brand as one of China’s leading private educators.
As a regular China IPO watcher, I’ll admit that Hailiang didn’t make it onto my radar screen in July when it made a small offering using the relatively low-profile “best-efforts” method. That’s not too surprising, since China’s markets were in free-fall at that time after a spectacular run the previous year, and their downward spiral was infecting most of their US-listed Chinese cousins. Read Full Post…
Bottom line: Their latest results show private education companies like New Oriental and TAL could be steadier, more recession-proof bets as China’s economic slowdown accelerates, though neither is likely to produce astronomical growth rates.
Educators New Oriental, TAL post steady growth
Leading private educators New Oriental (NYSE: EDU) and TAL (NYSE: XRS) have just reported their latest quarterly results, which seems like a good time to review an overlooked sector that could be relatively recession-proof as China enters a major economic slowdown. Both companies are sending similar signals, basically that their business is growing steadily and is set to keep on a similar track through the end of the year. That may normally not look too exciting, but in these economically uncertain times such words of reassurance actually seem relatively positive.
New Oriental shares surged after its latest report last week, even though the company didn’t announce any major changes in recent trends. TAL shares actually fell 2 percent after it issued a similar report that showed strong growth going into the end of the year. But that said, it’s also worth noting that TAL shares trade at a price-to-earnings (PE) ratio of 40, or double the level for the slower-growing New Oriental. A third, much smaller company from the sector, recently listed private school operator Hailiang (Nasdaq: HLG), will issue its first financial results announcement later this week. Read Full Post…
Bottom line: Mecox Lane’s privatization plan should succeed, but the company is likely to continue its decline even if it re-lists in China under its current lackluster management.
Mecox Lane gets buyout offer
The current privatization wave is giving me a chance to revisit some companies that I haven’t written about in quite a while such as former e-commerce superstar Mecox Lane (Nasdaq: MCOX), which has just become the latest name to receive a buyout offer. In a slightly surprising twist, Mecox Lane’s shares tanked after it made the announcement, losing more than 8 percent to close around 20 percent below the buyout offer price.
Mecox’s announcement is one of the smallest so far in terms of deal value, since the company only has a market value of about $40 million. That’s even less than the $63 million education specialist New Oriental (NYSE: EDU) will need to pay an unusual special dividend announced just a day earlier, in a move I interpreted as a signal that the company had no plans to join the exodus of Chinese companies from New York. (previous post) Read Full Post…
Bottom line: New Oriental’s special dividend sends a signal that it has no plans to de-list from New York, even as short-sighted companies like Qihoo continue buyout plans in pursuit of higher valuations in China.
New Oriental awards special dividend
Nearly 2 weeks after the last US-listed Chinese companies announced plans to privatize, education specialist New Oriental (NYSE: EDU) is sending a different signal that indicates it has no plans to abandon its New York listing anytime soon. That signal comes in a footnote to New Oriental’s newly announced quarterly earnings, in which it declares a rare special dividend — something you wouldn’t expect a company to do if it was planning to soon de-list.
At the same time, software security specialist Qihoo (NYSE: QIHU) is reaffirming its previous plans to push ahead with its privatization scheme, even as investors remain skeptical that this particular deal could fall apart. Qihoo is easily the largest of China’s companies looking to privatize so far, and clearly investors are worried that the company won’t be able to complete its buyout worth nearly $10 billion due to the recent market volatility in China. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 21. To view a full article or story, click on the link next to the headline.
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Itochu, Charoen (Tokyo: 8001) Pay $10.4 Bln for Stake in Citic (HKEx: 267) (English article)
China Telecom Incremental Increases Outpace China Mobile, Unicom in 2014 (Chinese article)
Spring Airlines (Shanghai: 601021) To Make Trading Debut In Shanghai (Chinese article)
New Oriental (NYSE: EDU) Announces Second Fiscal Quarter Results (PRNewswire)
