Price increases and higher enrollment are expected to drive continued topline growth in China’s education market despite the country’s macroeconomic slowdown, says Ella Ji, an Executive Director and Senior Analyst for Oppenheimer & Co. Inc.
“For example, take the after-school tutoring market, which is a very popular sector now. Almost all of the companies that I cover are involved in this sector. The after-school tutoring sector is now valued at a market size of over $20 billion, and it’s still growing, as I said, in the midteens, driven by price increases and also enrollment increases,” she said.
Ji recommends TAL Education Group (XRS) as the company recently achieved more than 40% topline growth. She says TAL Education is known for its high quality of tutoring services, and its students achieve high scores among national competitions, and also during college entrance exams, which boosts its enrollment despite increased pressure from peers.
“I always like companies with strong brand names and differentiating products or services. I think they are better equipped to win out and gain market share among this very intense competition. This is because tutoring services is an old-fashioned industry. There is nothing really fancy about it. While this market has thousands and thousands of players, it is important to differentiate yourself from your peers,” Ji said.
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