Replies to post #57 on New Oriental Education and Tech Group Inc (EDU)

[JohnCM]

Watch Tal Education, New Oriental as China tutoring policies not as harsh as expected, analyst says

Jul. 08, 2021 9:25 AM ET
By: Josh Fineman, SA News Editor

Watch Chinese tutoring companies Tal Education (NYSE:TAL) and New Oriental (NYSE:EDU) as some Chinese areas are reportedly banning K-9 tutoring for summer vacation rather than K-12, according to Jefferies.
Chaohu and Funing governments issued orders to ban after-school tutoring for K-9 for summer vacation that starts Sept. 1, Jefferies said, citing a report from Ruiyi News.

"We believe this will gradually remove uncertainties, which have been the most significant drag on share prices," according to Jefferies analyst John Chou.

Chou initially had floors of for $46/share for TAL and $12 for EDU in a K-12 national ban, but with a K-9 ban his floor value would increase by 30%.

Last month, TAL Education, New Oriental drop after downgrades at Morgan Stanley on regulatory concerns.

The downgrades last month came as shares of the Chinese tutoring companies have plunged in recent months on fears that the government could institute a ban on after school tutoring on weekends and holidays. Chinese tutoring companies dropped after Chinese President Xi Jinping stressed the need for regulations for both online and offline after-school training institutions.