Macquarie analyst Linda Huang notes that following the guidelines for non-academic tutoring institutions issued in March 2022, China’s Ministry of Education and 12 other departments jointly issued new guidelines for the non-academic tutoring industry, including stricter and detailed standards for course fees, tutor credentials, teaching time as well as the inspection of operations of non-academic tutoring institutions. While she points out that the AST companies under her coverage have been compliant with the rules, she acknowledges that investment sentiment may be impacted in the near-term and may see profit-taking pressure since their share prices have rallied over 50% in the last two months. Huang maintains Outperform ratings on New Oriental Education & Technology (EDU), TAL Education (TAL) and Youdao (DAO) and suggests investors revisit post the selloff, since the listed companies are compliant with government regulations and able to consolidate the market.
Published first on TheFly
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