Recently, news such as “off-campus training will be completely banned from October 15” and “all education and training institutions will stop operating in a one-size-fits-all manner” has been spread online. Yesterday, the China Private Education Association refuted this news.
Affected by the above news,$NEW ORIENTAL-S(09901.HK)$An increase of more than 7%,$21CENTURY EDU(01598.HK)$An increase of nearly 6%.
In terms of news, on September 26, the China Private Education Association refuted the rumor that “out-of-school training will be completely banned from October 15.” The Association said that on September 12, the Ministry of Education announced the “Interim Measures on Administrative Penalties for Out-of-School Training” to the public, and the “Measures” will take effect from October 15, 2023.
The “Measures” are not spread online and require a complete ban on off-campus training, but rather to manage out-of-school training in accordance with the law, so that compliants can be protected, offenders pay the price, so that out-of-school training can run on the track of the rule of law, and promote the healthy development of the industry.
Out-of-school training policies have attracted market attention
In fact, since 2021, the market has paid particular attention to the topic of out-of-school training. From strong one-size-fits-all supervision in the past to the current introduction of relevant regulations and the emergence of licenses for online non-subject training schools, there have been some subtle changes in the supervision system.
Guoxin Securities pointed out a few days ago that this round of regulation is likely to be a long-term benefit for leading companies that actively respond in advance and quickly in accordance with government requirements by raising the entry threshold for the industry and clearing out some small and medium-sized institutions that are not in compliance and unable to cope with changes.
At one point, New Oriental rose nearly 8% intraday
In terms of individual stocks, New Oriental is a giant in the domestic training industry. Net revenue for the fourth quarter of 2023 (ending May 31, 2023) was US$860.6 million, compared to US$524 million for the same period last fiscal year, up 64.2% year on year; net profit attributable to shareholders of listed companies was US$28.96 million, up 115.3% year on year, turning losses into profits.
At the same time, they also announced revenue of US$2,997.8 billion for fiscal year 2023, a year-on-year decrease of 3.5%. Net profit was 177.3 million US dollars, and net loss for the same period last year was 1,187.7 million US dollars, an increase of 115% over the previous year.
The results also indicate that the new education business brought better profits than expected. For this new education business, it mainly includes non-subject tutoring, such as storytelling, eloquence, and writing, as well as quality courses such as programming, art, robotics, and science. As of May 31, 2023, non-subject tutoring services have been developed in about 60 cities, attracting 629,000 students to sign up this fiscal season.
In addition to New Oriental's new education business being better than expected, the company established Beijing New Oriental Cultural Tourism Co., Ltd. in July to target middle-aged and elderly consumers and enter the cultural tourism market. The establishment of a cultural tourism company. This is also regarded by the market as a continuation$EAST BUY(01797.HK)$Another startup after that.
Tianfeng Securities pointed out that after many years of environmental and policy influence, many of New Oriental's core businesses are currently at the starting point of a new round of growth, and the scale of the business is expected to quickly release profitability or continue to be realized. Previously, the company's business had been basically adjusted, and core businesses such as universities and overseas studies were not affected by a double reduction, and the potential for newly cultivating quality training and Oriental selection can be expected.
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