Gaotu Urges Investors to See Education Cleanup as ‘New Beginning’

Company says it will focus on professional education and more holistic learning courses going forward Key takeaways: Gaotu discloses K-12 education services targeted in government education cleanup accounted for 94% of its revenue in three months through June Company says it will focus on education for adults, test preparation and holistic-oriented ‘STEAM’ learning in the future By Doug Young Think of it as a new beginning, rather than the end, of an era. That was the message coming from former education powerhouse Gaotu Techedu Inc. (GOTU.US) in its latest financial…

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Youdao Offers Diversification Lesson as Education Crackdown Climaxes

Online tutoring services provider’s shares have rallied more than 30% since it reported big jumps in revenue across all business segments in the second quarter Key takeaways: •      Youdao’s revenue more than doubled in the second quarter from a year earlier, with all business segments performing strongly •      The results came as China cracks down on after-school tutoring services that account for less than half of Youdao’s revenue By Warren Yang Online tutoring services provider Youdao Inc. (DAO.US) is offering a real-life lesson on the virtues of diversification, as many…

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Education Crackdown Creates ‘Zombies Companies’ in Need of Transformation

Beijing municipal government’s new rules requiring non-profit status for after-school tutoring firms marks group’s latest setback Key points: Beijing has become the first major city requiring all after-school education companies to become non-profits, according to announcements from the companies Companies are unlikely to be shut down, but may have to sell core assets and look for new businesses to take advantage of their core skills and technologies  By Doug Young China’s bustling crowd of after-school tutoring providers are increasingly looking like field of “zombie companies.” That’s one key takeaway from…

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Education Stocks Could Offer Bargains – For Those Who Choose Correctly

Massive selloff saw Chinese educator stocks fall as much as 70% on Friday on fears government could ban them from operating for profit Key points: Latest government ‘opinion’ document could ban private after-school education companies from operating on for-profit basis Policy is likely to meet with industry pushback, and also protest from parents who see it as too extreme By Doug Young This week may look like any other for most people, but it has turned into a sudden life-or-death situation for many of China’s private education companies. The group…

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School Operator Hailiang Expands Franchise Model with Private Sector Tie-Up

Deal will see company take over management of two privately owned schools for the first time Key points: Hailiang has expanded its franchise-style business model with a new agreement to take over two privately owned schools in Shandong province The company is unlikely to be affected by the crackdown on private educators due to its focus on primary rather than extracurricular learning By Doug Young As a Sept. 1 “day of reckoning” fast approaches for China’s new generation of private education companies, one name that appears to be positioned above…

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Adult Educator Jianzhi Defies Regulatory Storm With IPO Application

Profitable provider of educational content to universities and libraries files for New York listing to raise $50 million Key points: Jianzhi is different from most education companies to recently list due to its focus on adult education and the fact that it’s profitable Company could be valued in the $600 million to $800 million range due to its profitability and relatively low regulatory risk By Doug Young “Brave” is the first word that comes to mind to describe a newly filed IPO application from Jianzhi Education Technology Group Co. Ltd.…

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Investors Bet on Older, Offline Plays Among Battered Education Stocks

Embattled sector braces for reckoning day in September when all private educators will be required to have government licenses Key points: China East Education’s rally owes to its newly announced share buyback, as well as growing confidence it will suffer less impact from an ongoing sector crackdown Older players like New Oriental and TAL Education also look well positioned to weather the cleanup By Doug Young There’s nothing like a fire at someone else’s home to divert attention from your own burning house. That’s the latest message coming from China’s…

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Daojia Chases Unicorn Status on China’s Growing Thirst for Maids, Nannies

Provider of domestic workers to nation’s expanding middle class files for New York IPO with initial fundraising target of $100 million Key points: Domestic worker provider Daojia is unlikely to attain a market value of $1 billion in its upcoming IPO due to its relatively small size Company could become more attractive as it shifts from providing domestic workers to higher-margin training services By Doug Young Private education companies have been in a state of limbo for much of the last year, as China gets set to rein in the…

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Spark Education Launches IPO Into Regulatory Storm

Looming crackdown aimed at easing pressure on students could force online small-class specialist to slash its fundraising plans Key points: Despite its rapid growth, Spark Education’s IPO is likely to get most scrutinized for its comments about China’s looming crackdown on extracurricular educators Regulatory uncertainty could force the company to slash its fundraising target by about half By Doug Young Talk about bad timing. Online education specialist Spark Education Ltd. has just filed its prospectus for a New York IPO that would look quite attractive if not for a huge…

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Global EduTech Finds Profits in Study Abroad

Hong Kong IPO candidate finds lucrative business model by linking up Chinese students with Western schools Key points: Global Education Technology is one of the few in a new generation of Chinese education service providers that is profitable The company has carved out a strong niche by acting as middleman between Western schools and Chinese students looking to study abroad By Doug Young We begin the week with a look at a new Hong Kong IPO filing by Global Education Technology Holdings Ltd., a relative rare company in China’s ultra-competitive…

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