Analyst

Steve Zhou, CFA

Equity Bottom-Up

China Beststudy Education Group / Equity Bottom-Up

<ul>
<li>China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. </li>
<li>Even though <a href="https://www.smartkarma.com/entities/new-oriental-education-techn-cc88998e-fe0d-4a03-b544-f3e9836b06a2" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education &amp; Techn (EDU US)</a> had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.</li>
<li>My sector top pick is <a href="https://www.smartkarma.com/entities/china-beststudy-education-group" target="_blank" data-smartkarma-citation="entities:40632:1" rel="noopener">China Beststudy Education Group (3978 HK)</a>, as valuation is lower and growth is higher, though it has a much smaller market cap..</li>
</ul>


China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. 
Even though New Oriental Education &amp; Techn (EDU US) had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.
My sector top pick is China Beststudy Education Group (3978 HK), as valuation is lower and growth is higher, though it has a much smaller market cap..


China After-School Tutoring:  Still In The Early Innings; Prefer China Beststudy Over EDU

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-beststudy-education-group" target="_blank" data-smartkarma-citation="entities:40632:1" rel="noopener">China Beststudy Education Group (3978 HK)</a> is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area. </li>
<li>The company is trading at 5x forward PE (2024), and I expect earnings to grow &gt;100% in 2024 off of a low base, and &gt;30% in 2025.  </li>
<li>I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU's current 20x.</li>
</ul>



China Beststudy Education Group (3978 HK) is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area. 
The company is trading at 5x forward PE (2024), and I expect earnings to grow &gt;100% in 2024 off of a low base, and &gt;30% in 2025.  
I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU's current 20x.


China Beststudy Education (3978 HK):  A Darkhorse Stock In The China Tutoring Sector

New Oriental Education & Techn / Equity Bottom-Up

<ul>
<li>Today, after Hong Kong market close, the Ministry of Education issued a new draft regulation on K12 tutoring. </li>
<li>I have written before on <a href="https://www.smartkarma.com/entities/new-oriental-education-techn-cc88998e-fe0d-4a03-b544-f3e9836b06a2" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education &amp; Techn (EDU US)</a> and China Beststudy that there is now a equilibrium reached between all parties on tutoring in China. </li>
<li>The new draft regulation basically puts it into concrete policy, which should alleviate investor concern on the sector. </li>
</ul>


Today, after Hong Kong market close, the Ministry of Education issued a new draft regulation on K12 tutoring. 
I have written before on New Oriental Education &amp; Techn (EDU US) and China Beststudy that there is now a equilibrium reached between all parties on tutoring in China. 
The new draft regulation basically puts it into concrete policy, which should alleviate investor concern on the sector. 


EDU/TAL:  China Tutoring - Here Comes The Policy Tailwind

China

China Kepei Education Group Limited provides educational services. The Company offers high-quality profession-oriented education services and other services. China Kepei Education Group provides services in China.

Shanghai Xin Nanyang Co., Ltd., through its subsidiaries, manufactures communication products and industrial equipment, develops cable TV network, security trading, and communication systems, provides network integration, education, and precision processing services.

China YuHua Education operates private education from kindergarten to university in China.

JH Educational Technology Inc. provides education services. The Company offers higher education, secondary education, and other services. JH Educational Technology provides services in China.

Dong Yi Ri Sheng Home Decoration Group Company Limited designs and constructs set decorations, integrates home decoration materials, manufactures wood products and provides organic home decoration solutions, and its franchise business.

Dong Yi Ri Sheng Home Decoratn Gp (002713 CH)

MINSHENG EDUCATION Group offers education services. The Company provides higher and vocational education services mainly in China.    

Eastern Pioneer Driving School Co. Ltd. operates as a driving school.  The Company offers training for a variety of vehicles including passenger cars, motorcycles, trucks, and more.

China Xinhua Education Group Limited offers educational services. The Company provides undergraduate and vocational educational programs. China Xinhua Education Group serves students in China.

China Maple Leaf Educational Systems Limited is a Chinese international school operator. The Company operates high schools, middle schools and elementary schools across various Chinese cities.

China Maple Leaf Educational Systems (1317 HK)

Virscend Education Company Limited is a K-12 private education company. The Company provides foreign exchange programs, mandates English to be taught, and provides different schools with different focuses.

Chegg, Inc. provides online educational platform. The Company offers homework help, course selection, note taking, manuals, and textbook rentals services. Chegg serves customers throughout the United States.

The Cross-Harbour (Holdings) Limited, through its subsidiaries, operates a driver training center, tunnel, and electronic tolls. The Company also provides treasury services.

American Public Education Inc. provides online postsecondary education directed at the needs of the military and public service communities.  The Company offers a wide range of degree programs and certificate programs including national security, military studies, intelligence, homeland security, criminal justice, technology, business administration and liberal arts.

PIA CORPORATION provides event ticketing services in Japan.  The Company sells tickets for concerts, sporting contests, and other events of entertainment value through telephone operators, mobile phone services, and a network of ticket stores.  Pia also operates in entertainment publishing and information distribution services.

Nagase Brothers Inc. operates cram schools mainly in Tokyo metropolitan area. The Company offers educational services for elementary, junior high, and high school students.  Nagase Brothers also offers educational services via satellite.

JP-HOLDINGS, INC. is a Japan-based company that provides child-care centers. The Company provides food catering services for child-care centers. JP-HOLDINGS also offers English language Classes and Gymnastics Classes

The Far Eastern University, Incorporated operates as a private non-sectarian institution of learning in the Philippines. It offers various programs in arts and sciences, such as Master of Arts (MA) in psychology; MA with majors in mass communication and letters; Bachelor of Arts in communication, English language, literature, political science, and international studies; and Bachelor of Science (BS) in biology, psychology, applied mathematics with information technology, and medical technology. The company also provides accounts, business, and finance programs, including BS in accountancy; and BS in business administration with majors in business economics, financial management, marketing management, human resource development management, operations management, business management, internal auditing, and legal management. In addition, it offers BS in hotel and restaurant management, and tourism management; Doctor of Education with major in educational administration; MA in education with majors in educational administration, thesis and non-thesis curriculum and instruction, and special education; Bachelor of Elementary Education with majors in general and special education; Bachelor of Secondary Education with majors in mathematics, sports and recreational management, English, and general science; and Bachelor of Physical Education with major in school physical education certificate and teacher certificate programs. Further, the company provides other programs that include BS in architecture; Bachelor of Fine Arts with majors in advertising arts and painting; Bachelor of Law and Juris Doctor; MA and BS in nursing; Master of Business Administration; and BS in accounting technology and information technology. Additionally, it offers engineering and computer studies programs; and pre-school to high school education. The Far Eastern University, Incorporated was founded in 1928 and is based in Manila, the Philippines.

Siam Wellness Group Public Company Limited owns and operates spa and wellness centers. The Company also provides management and consulting services.

STUDIO ALICE Co., Ltd. operates photo studio chain stores for children throughout Japan.  The Company provides a variety of costumes at its studios. STUDIO ALICE mainly operates direct-run stores.

RISO KYOIKU CO., LTD. operates cram schools (Juku) and provides academic tutoring and exam preparation on a one-on-one basis.  The Company's classes are primarily for elementary, junior, and high school students.

China Beststudy Education Group provides education services. The Company offers after-school education services, school subject-related courses, and other related services. China Beststudy Education Group provides services in China.

China Beststudy Education Group (3978 HK)

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China Beststudy Education Group (3978 HK)

China After-School Tutoring: Still In The Early Innings; Prefer China Beststudy Over EDU

China Beststudy Education (3978 HK) is up 15% today on good volume on the back of raised guidance for FY24 by management. The stock has more than...

Steve Zhou, CFA

China Beststudy Education (3978 HK): A Darkhorse Stock In The China Tutoring Sector

High conviction pick in a very attractive sector with policy tailwind now. Volume starting to pick up indicating more investor interest. Still...

Steve Zhou, CFA

EDU/TAL: China Tutoring - Here Comes The Policy Tailwind

The Ministry of Education issues new draft regulation on K12 tutoring in China, bringing clarity and alleviating investor concerns.

Steve Zhou, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China After-School Tutoring: Still In The Early Innings; Prefer China Beststudy Over EDU

China Beststudy Education (3978 HK) is up 15% today on good volume on the back of raised guidance for FY24 by management. The stock has more than...

Steve Zhou, CFA

China Beststudy Education (3978 HK): A Darkhorse Stock In The China Tutoring Sector

High conviction pick in a very attractive sector with policy tailwind now. Volume starting to pick up indicating more investor interest. Still...

Steve Zhou, CFA

EDU/TAL: China Tutoring - Here Comes The Policy Tailwind

​The Ministry of Education issues new draft regulation on K12 tutoring in China, bringing clarity and alleviating investor concerns.

Steve Zhou, CFA

The Ministry of Education issues new draft regulation on K12 tutoring in China, bringing clarity and alleviating investor concerns.