Tag - CEDU

Share of ChinaEdu Corp. (Nasdaq:CEDU) are treading lower ahead of the bell after the educational services provider in China reported first-quarter results Wednesday evening that fell short of the forecast on Wall Street. Adding to investors’ souring sentiment, the company issued second-quarter revenue guidance below analysts’ estimates.

Shares flopped 11%, or $0.78, to $6.44 ahead of the bell. For detailed price information and recent news stories about ChinaEdu, click CEDU.

Since philosopher Confucius stressed learning as essential to self-transformation and the improvement of society as a whole, the Chinese have attached great importance to education. In the past three decades, China has come a long way educationally. At the end of the decade of social upheaval known as the Cultural Revolution in 1976, China’s literacy rate stood at only 60%. Today, it's 85%, with the rate for citizens between the ages of 12 and 40 at an impressive 96%.

Last week, Chinese Vice President Xi Jinping's met with Richard C. Levine, president of Yale University. The two officials discussed the possibility of educational exchanges and the need for increased cooperation between the two countries. During the meeting, Xi said the Chinese government will continue to make education a priority.

Beijing-based educational services provider ChinaEdu Corporation (Nasdaq:CEDU) hopes to play a significant role in continuing the trend toward increased education. ChinaEdu's primary business is providing online courses and interactive tutoring services, but it also operates private primary and secondary schools, and markets and supports international curriculum programs in the People's Republic of China. A domestic leader in the distance-learning sector in terms of student enrollment, the company has exclusive, long-term contracts to run online degree programs for 10 Chinese universities (and strong relationships with a total of 12 institutions of higher learning). The online learning segment generates nearly three-quarters of the company's revenues. 

International business experts believe that distance learning will help give Chinese companies and multinationals operating in China access to a much-needed labor pool of highly trained staff with global exposure, while the education czars in the Ministry of Education's Curriculum Development Center view distance learning as a means of reaching areas in China with teacher shortages (particularly in Western . . .

Chinese culture has long placed a high value on education, traditionally attaching great importance to and a healthy respect for learning. But the Cultural Revolution, a decade of social and political upheaval that ended after the death of Mao Zedong in 1976, stifled Chinese academic progress. Since then, China has come a long way. Literacy has risen to 85% from 60% (the literacy rate for 12- to 40-year-olds now stands at 96%).

In a society where excelling in school is, for the most part, the only stepping stone to success, education takes on great significance. Also, as the country's red-hot economy fuels the growth of both domestic and international businesses, the demand for higher levels of education and skills continues to increase.

The Chinese government is nudging institutions of higher education to turn out a well-trained workforce with practical skills and language abilities that will enable China to develop service-based industries and compete with tech-savvy global companies.

One outfit poised to capitalize on China's fast growing education market is ChinaCast Education Corporation (Nasdaq: CAST), an e-learning and private-education specialist that provides Internet-based and conventional training services to universities, trade schools, corporations and government agencies. ChinaCast specializes in interactive distance learning, multimedia education content, online educational portals, language training and information technology management and certification courses.

Following in the footsteps of Beijing-based educational services juggernaut New Oriental Education & Technology Group Inc. (NYSE: EDU), which provides traditional and online learning programs, ChinaCast hopes to mimic the success of U.S. companies like such as DeVry Inc. (NYSE: DV), ITT Educational Services, Inc. (Nasdaq: ESI), Appolo Group, Inc. (Nasdaq: APOL) and Corinthian Colleges, Inc.(Nasdaq: COCO). The company is off to a good start, with three solid quarters, a couple of smart acquisitions and a recent Nasdaq listing to its credit.

ChinaEdu
www.chinaedu.com
(Nasdaq: CEDU)
Scheduled for Dec. 10
$52.4 million estimated proceeds
$214.3 million post-money valuation

Education companies have made popular IPOs in recent months and so have Chinese companies. ChinaEdu is the logical extension — an education company based in China. Talk about the bankers being on top of trends. ChinaEdu provides online programs to supplement the offerings at several Chinese universities, operates its own private online K-12 tutoring company and private elementary schools, and offers online English courses to Chinese speakers no matter where they are.

China has a high rate of basic literacy, and many Chinese people know that they need even more education to compete in a rapidly industrializing nation and a global economy. Hence, they are willing to pay extra to educate themselves and their children. ChinaEdu was formed in 1999 to provide online services at Renmin University of China. The core business contracts with campuses rather than directly with students, but acquisitions into the tutoring, elementary and vocational educational markets have brought ChinaEdu face to face with the students who use its services.

The proceeds of the deal will be split between general corporate use and capital spending, including opening a network of learning centers and construction at a private elementary school and at a language school. Some of the venture capital firms are reducing their ownership, but not all are. After the IPO is priced, the officers and directors will own about a quarter of the company and three venture investors, Tiger Global, Qing Li and The McGraw-Hill Companies, will own about another quarter. (McGraw Hill, of course, has a huge interest in education through its textbook divisions.)