Mark Zuckerberg might risk his entire fortune on THIS
Has he lost his mind? Some believe he has… He’s already invested billions in a device he claims, “will become a part of daily life for BILLIONS of people.” The media mocked him mercilessly… until the device worked.
Now, billions of dollars are up for grabs in this space. See how to stake your claim here.
A Different Kind of Arms Race in China
By Scott Chan
The SAT, offered seven times a year, is a rite of passage for U.S. high school students who wish to go to college. A high school on the standardized exam can mean the difference between admission to a college of one’s dreams and settling for a backup. U.S. students have the option to take the standardized exam as many times as they want and have the option to report the score of their choice in their college applications.
Since most students choose to take the SAT in their junior and senior years, students usually begin to prepare in the high school, though some begin to prepare as early as middle school.
As important and challenging as the SAT may be to American students, however, it’s nothing compared to the gruelling exam their counterparts across the Pacific must tackle. China’s annual National College Entrance Examination (known as “gaokao” in Chinese) is held only once a year, in June, and the competition and pressure are so intense that some students use intravenous amino acid drips in order to replenish energy in order to burn the midnight oil.
The exact length and content of the gaokao vary by province but generally lasts about nine hours over two days and consists of a number of subjects, including English. The questions are notoriously difficult and the exam is widely held to be the toughest in the world.
Only about 60 percent of exam takers pass and far smaller percentage make it into top universities. Due to limited spots, in 2016 the top-two universities only accepted less than 6,700 total students out of 9.3 million who took the gaokao (0.07 percent). It’s not uncommon for students to spend their entire senior year preparing for this exam, including nearly all waking hours studying—in school and at home.
In a culture that greatly values education and academic prestige, parents feel pressure to partake in the education arms race. A degree from a top university could be the key difference maker in a very competitive job market. After all, if many other students are getting extra help, then not getting tutoring for your kids would put them at a disadvantage. Many children begin receiving tutoring as early as primary school. A common Chinese saying nowadays goes: “don’t let your child lose the race at the starting line.” As the population becomes more affluent and the middle class expands, parents are spending more money to get their kids as much extra academic help as possible as early as possible, a boon for tutoring businesses.
New Oriental Education & Technology Group (NYSE: EDU) and TAL Education Group (NYSE: TAL) are two leading Chinese private tutoring operators whose stocks have soared this year thanks to said growing demand.
By student enrollment, New Oriental is the largest tutoring operator in China. In fiscal 2017, ended May 2017, it had 4.9 million student enrollments. At the end of May, it had 855 learning centres, including 77 schools, 20 bookstores and an extensive online platform with over 17 million registered users and over 22,000 teachers in 65 cities. The company originally began as a test preparation center focused on preparing Chinese students for U.S. exams to study abroad, but has since increasingly relied on domestic K-to-12 tutoring as the key revenue growth driver.
As for TAL, at the end of May it owned 567 learning centres in 35 cities. This marks an addition of 60 centres and 5 cities during the February-to-May quarter. Student enrollment in the quarter grew by 62 percent to 1.05 million compared to a year ago, which drove the revenue increase of 65 percent, to $321.9 million. Compared to one year ago, the number of centres and cities grew by 172 and 10, respectively.
TAL commands a higher P/E, but it is the faster growing of the two. Enrollments grew 70 percent year over year in the last fiscal year (to 3.9 million), compared to New Oriental’s 40 percent. It’s now very aggressively opening new learning centres. On the other hand, New Oriental is already past its fast-expansion phase. It has intentionally slowed its annual learning centre increase to about 8 percent on average.
The net result is TAL will enjoy faster-growing revenues but its profits will likely be more volatile due to the faster-growing costs of opening new centres and hiring new staff. Over the next three to five years, we expect New Oriental’s earnings to share to rise at an annual rate in the 20’s while TAL, assuming no hiccups in its growth strategy, could expand at 40 percent or better a year.
Unless the Chinese government decides to overhaul its education system to ease exam and university admission requirements or restrict how much tutors can charge, the tutoring market will continue to grow. Some estimates expect after-school tutoring revenues to at least double by 2021.
The penetration of K-to-12 after-school tutoring in Tier 1 cities (China’s five largest) is pretty high—estimated to be around 80 percent—but there are still plenty of underserved areas and both companies are expanding into said areas. As China’s GDP continues to rise, more and more families from smaller cities and even rural areas will seek to tutor for their children in order to pursue a better life. New Oriental and TAL’s offering of online courses allows them to capture students who reside in areas their learning centres do not serve.
Although they are two of the largest private tutoring operators in China and they are both gaining market share, from smaller competitors, New Oriental and TAL still account for a small share of the market, probably 5 percent or less combined. Expect both to continue to grab an increasing share of the growing pie.
Both stocks are richly valued, due to expectations of fast growth. In percentage terms, TAL will likely experience higher highs and lower lows than EDU, so more conservative investors probably would prefer the latter but the potential upside is higher for TAL. Both stock prices declined recently in what appears to be profit taking but have quickly recovered most of the lost ground.
This obscure plan doles out up to $1,003 a month in extra government cash
If you call your congressman, senator, or even the Social Security office down the street and ask them about this little-known opportunity, I’m certain they’ll tell you they’ve never heard of it. That doesn’t mean it doesn’t exist. Or that they’re trying to keep it a secret.
This income-boosting loophole is so obscure, less than 1/10 of 1% of Americans are taking advantage of it.