Consumer Discretionary, Financials Author: EqualOcean News, Yuchen Fu Jul 26, 2021 06:03 PM (GMT+8)

On July 26, New Oriental announced on the Hong Kong Stock Exchange that it was considering appropriate compliance measures in response to the 'Double Reduction' policy.

New Oriental Building

On July 26, the market capitalization of New Oriental's Hong Kong shares fell below CNY 30 billion. As of that day's close, the share price of New Oriental fell 37.48% to HKD 18.88 per share, with a total market capitalization of HKD 32.36 billion (about CNY 27.00 billion); the company's online shares decreased 31.42% to HKD 4.06 apiece, with a total market capitalization of HKD 4.06 billion (about CNY 3.39 billion).

On July 23, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the statement, 'Opinions on Improving and Reducing the Burden of Students' Work and Off-campus Training in Compulsory Education' ('Double Reduction'), in which was proposed a prohibition on the capitalization of discipline-based training institutions.

As of the closing of Hong Kong stocks on July 23, the company's share price had fallen by 40.61%. Its market value had evaporated by nearly HKD 40 billion. Compared with the peak of its share price on February 26 this year, it had dropped by 80.98%, with a market value of HKD 220.42 billion (about 183.67 billion).

As of the closing of the US stocks on July 23, the value of New Oriental U.S. stock market plunged 54.22% to USD 5.02 billion (about CNY 32.55 billion), with the share price has fallen 85.33% from its peak on February 26. Meanwhile, the market value has dropped to USD 29.21 billion (about CNY 189.32 billion).

On July 24, the previous research report of CITIC Securities pointed out that, in the future, K9 discipline training institutions may enter a long period of strong supervision, and both business development and capitalization will be restricted. Therefore, it is recommended that training institutions transform to quality education, vocational education and education technology modes that are more encouraged by current policies.

New Oriental Education & Technology Group Inc. is a comprehensive education group in China, providing a wide range of courses, services and products to a varied student population throughout the country. New Oriental's programs, services and product offerings consist of K-12 after-school tutoring, test preparation, language training for adults, pre-school education, primary and secondary school education, education materials and distribution, online education and other services.

New OrientalRMBSharesprice of stockDouble subtraction