Tag - Esi

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.

Education has been a minefield for investors and has lost much of its luster in recent years. Remember Edison Schools, Inc.? This is the company that was going to revolutionize public school education by managing schools better. Its shares hit a high of $40 before plunging to $0.14 and being taken private at $1.75 a share in 2001. As a private company, it has moved away from managing schools to providing supplemental educational services.

Federal investigations of everything from student loan abuses to inflating enrollment figures hit stocks like Computer Learning Centers, now bankrupt, and ITT Educational Services Inc. (NYSE: ESI), taking the shine off the for-profit publicly traded education company and keeping the sector somewhat undervalued.
 
Some companies are trying to buck this trend. One of them is Nobel Learning Communities, Inc. (Nasdaq: NLCI). The operator of more than 150 private schools in the pre-school through middle school range reported significant double-digit increases in revenue and income for the fiscal third-quarter ended March 31, on top of regular gains in previous quarters. After hovering around $10 for nearly two years, the stock has moved upward in the past six months and now trades above $15, giving NCLI a market cap of $160 million. The 52-week high was $16.34 in March and the low was $9.98 last August.
 
The company has a new $50 million financing in place and is ready to take advantage of growth opportunities. After selling one school in the third quarter, the company announced in May the sale of six schools that had been targeted for sale as part of the company’s divestment of non-strategic assets. The schools that were sold had been a drag on earnings. Net proceeds of $2 million in the six-school sale –  yielding an after-tax gain of $600,000, or $0.05-0.06 a share, for the fiscal fourth quarter ended June 30 – were used to pay down remaining debt under the facility so that the full amount is available for future acquisitions or capital expenditure.