China tutoring cos: MS sees near-term regulations, long-term growth

NaaS Technology

25/03/2019 15:20

** Tightening regulations and increasing demand have changed
the landscape for China After School Tutoring (AST) companies,
according to Morgan Stanley
    ** In a research note, lead analyst Sheng Zhong upgrades TAL
Education Group  TAL.N  and New Oriental Education & Technology
Group Inc  EDU.N  to "overweight" from "equal-weight," but
downgrades Rise Education Cayman Ltd  REDU.O  to "equal-weight"
from "overweight"
    ** TAL and EDU last up 2.3 pct and 4.0 pct, respectively;
REDU recently flat
    ** Sheng sees implementation of regulations causing ongoing
volatility in stock prices, but spending growth in lower tier
cities and momentum in online education will help China
education market to expand by two-thirds in the next decade
    ** TAL has the "highest long-term growth potential" due to
investment in technology, writes Sheng
    ** REDU likely to see slower expansion due to tougher
competition in the English language tutoring (ELT) space
    ** All 3 stocks have surged so far this year; REDU is up ~22
pct, TAL has gained ~33 pct and EDU has jumped ~52 pct

 (Reporting by Stephen Culp)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))