Market Leaders to Benefit from Industry Consolidation
Thanks to subscriber for this report from Morgan Stanley which may be of interest. Here is a section:
Here is a link to the full report.
For most families education is the surest and in many cases only way to climb out of poverty. Despite the fact there is a great deal of debate about the best way to impart knowledge and indeed what should be prioritised in the West, Chinese parents are under no illusion, their child has to perform well in the state exam. Competition is such that the only way to ensure your child is getting the grades they need when you do not have knowledge/time yourself is to employ a tutor.
Tutoring is not only a Chinese phenomenon, it is part and parcel of education in most countries as students, and their parents, compete for a limited number of places. My children’s school teaches a year ahead and they are on the Saxon math program which means they do a lot of questions. It is time consuming to check answers and supplement knowledge where necessary so as they progress it is looking like an inevitability they will eventually need tutors for something.
My brother paid his way through university and a masters by tutoring maths and physics. I had another friend who paid for his doctorate by bringing freshmen business students up to speed on statistics. However the one-on-one business model is not scalable and online products are now predominating.
In China that takes on an even more intense dimension because there is so much competition for university places and families make great sacrifices to pay for tutoring. Every year WeChat is filled with stories of the sacrifices families make for their children’s success and often of the disappointment when a child does not succeed or even kills themselves because of the stress.
TAL Education has priced in a lot of good news recently and at least a pause and consolidation of powerful gains is now underway.
New Oriental accelerated to last week’s peak and is also at least consolidating that move.
2U Inc. is a US education software company which offers facilitation services for university online education platforms. The share broke out to new highs at the beginning of April and continues to extend its advance.