Chinese Education Market Projected to Grow

NEW YORK, October 26, 2017 /PRNewswire/ --

According to a report by Deloitte, the size of Chinese education market is expected to grow from 1.6 trillion (US$240 billion) yuan in 2015 to 2.9 trillion (US$450 billion) yuan by 2020. The ecosystem of Chinese education is complex. The main sectors in the industry are private education, studying abroad, trainings and online education. The report puts emphasis on online education, as it is the most innovative segment of the industry. "Major trends emerging in the sector of online education include 1) the integration of online and offline platforms, 2) the diversification of profit-making models, 3) the rising significance of mobile-end users, 4) penetrating into Tier 3 and 4 cities and the continued expansion of businesses, and 5) M&A deals boosting industry consolidation," the report claims. Hailiang Education Group Inc (NASDAQ: HLG), New Oriental Education and Technology Group Inc. (NYSE: EDU), TAL Education Group (NYSE: TAL), Bright Scholar Education Holdings Limited (NYSE: BEDU), RYB Education Inc (NYSE: RYB)

Chinese companies are looking for ways to expand operation abroad, creating opportunities for foreign investors. Deloitte reported that there are multiple models to enter the Chinese education market. Some of the more popular models include setting up overseas offices or subsidiaries as well as exporting online education. It is also important to note, that despite private education, studying abroad or vocational training, its regulatory policies and reforms that are crucial factors that can drive growth of the education industry and market.

Hailiang Education Group Inc (NASDAQ: HLG) after the market close yesterday announced breaking news that the company, "a provider of private K-12 educational services in China, announced its financial results for the fiscal year ended June 30, 2017.

Mr. Ming Wang, Chairman and Chief Executive Officer of Hailiang Education, commented, "We are pleased to report strong financial results for the fiscal year ended June 30, 2017. The true earnings power of Hailiang Education came into sharper focus with strong financial performance resulting in our financial performance reaching a historical high. Revenue increased by 30.5% to RMB853.3 million and net profit increased by 68.7% to RMB167.7 million. Our focus on sustainable and differentiated collaboration with third parties on expansion of our education resources, combined with strong operational execution, is helping drive profitability and cash flow generation to record levels as well."

Mr. Wang continued: "We made substantial improvements in advancing our vision and strategy, and building our brand awareness and promoting our company's culture, while at the same time rapidly expanding the profitability of and growth in our business operations. Overall, we completed the fiscal year with positive operating momentum, a strong balance sheet, and reliable cash flow that will enable us to continue to expand our operation via the asset-light model, i.e. operating private schools by renting existing school facilities and infrastructure. Looking ahead, we will continue to make improvements to our schools and expansion, deliver the highest quality education service in the private education industry as well as leverage a portfolio of various schools under the unique brand of Hailiang Education."

Revenues - For the fiscal year ended June 30, 2017, total revenues increased byRMB199.2 million (approximately US$27.5 million), or 30.5%, to RMB853.3 million (approximately US$125.9 million) from RMB654.1 million (approximately US$98.4 million) for the same period of last year. The increase in total revenues was mainly due to increases in tuition fee, especially our international program and the student enrollment. The total number of students increased by 2,277, or 12.2%, to 20,950 for the twelve months ended June 30, 2017 from 18,673 for the same period of last year…

Gross profit - Cost of revenue increased by RMB148.7 million (approximately US$20.5 million), or 29.9%, to RMB645.8 million (approximately US$95.3 million), for the twelve months ended June 30, 2017 from RMB497.1 million (approximately US$74.8 million) for the same period of last year. The increase in cost of revenue was mainly due to a 27.6% increase in labor costs. Gross profit increased by RMB50.6 million (approximately US$7.0 million) or 32.2%, to RMB207.5 million (approximately US$30.6 million) for the twelve months ended June 30, 2017 from RMB157.0 million (approximately US$23.6 million) for the same period of last year. Gross margin was 24.3% for the twelve months ended June 30, 2017, compared to 24.0% for the same period of last year.

Net finance income - Net finance income increased by RMB1.1 million (approximately US$0.1 million), or 19.8%, to RMB6.9 million (approximately US$1.0 million) for the twelve months ended June 30, 2017 from RMB5.8 million (approximately US$0.9 million) for the same period of last year, mainly due to an increase in interest income caused by more fund we deposited with the related party.

Net profit - Net profit increased by RMB68.3 million (approximately US$9.7 million) or 68.7%, to RMB167.7 million (approximately US$24.7 million) for the twelve months ended June 30, 2017 from RMB99.4 million (approximately US$15.0 million) for the same period of last year. Basic and diluted earnings per share were RMB0.41 (approximately US$0.06) for the twelve months ended June 30, 2017, compared with basic and diluted earnings per share of RMB0.24 (approximately US$0.04) for the same period of last year…"

New Oriental Education and Technology Group Inc. (NYSE: EDU) is the largest provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence. New Oriental offers a wide range of educational programs, services and products consisting primarily of English and other foreign language training, test preparation courses for major admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online education. On July 25, 2017, the company announced its unaudited financial results for the fourth fiscal quarter and fiscal year ended May 31, 2017. Total net revenues increased by 23.2% year-over-year to US$486.4 million for the fourth fiscal quarter of 2017. Net income attributable to New Oriental increased by 31.9% year-over-year to US$55.4 million.

TAL Education Group (NYSE: TAL) is a leading K-12 after-school tutoring services provider in China. The company offers comprehensive tutoring services to students from pre-school to the twelfth grade through three flexible class formats: small classes, personalized premium services, and online courses. The company's tutoring services cover the core academic subjects in school curricula including math, English, Chinese, physics, chemistry, and biology. TAL started its operations in Beijing in 2003, and has rapidly expanded its extensive network of 422 learning centers in Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Xi`an, Chengdu, Nanjing, Hangzhou, Taiyuan, Zhengzhou, Chongqing, Suzhou, Shenyang, Jinan, Shijiazhuang, Qingdao, Changsha, Luoyang, Nanchang, Ningbo, Wuxi, Fuzhou and Hefei.

Bright Scholar Education Holdings Limited (NYSE: BEDU) is dedicated to providing quality international education to Chinese students and equipping them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education overseas. It also complements its international offerings with Chinese government-mandated curriculum for students who wish to maintain the option of pursuing higher education in China. As of May 31, 2017, Bright Scholar operated 52 schools covering the breadth of K-12 academic needs of its students across seven provinces in China. In the first nine months of the 2017 school year ended May 31, 2017, Bright Scholar had an average of 29,613 students enrolled at its schools.

RYB Education Inc (NYSE: RYB) is an early childhood education service provider in China. During its nearly two decades of operating history, the Company has built "RYB" into a well-recognized education brand and helped bring about many new educational practices in China's early childhood education industry. As of June 30, 2017, RYB operated a network of over 1000 directly owned and franchised kindergartens and play-and-learn centers in approximately 300 cities and towns throughout 30 provinces and municipalities in China. The Company's substantial growth has been powered by its industry-leading curriculum development capabilities and teacher training system as well as its highly scalable business model.

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