This article is not to debate whether the decision is morally or economically justified but to identify any potentially undervalued companies within the industry. The company we have identified that stands out in valuations is Hong Kong-listed Edvantage Group Holdings, a small-cap education company in China.
About four years ago, the Chinese government clamped down on the private tutoring industry, which banned the provision of for-profit tutoring for subjects taught in school curricula.
Affected companies were forced to register as non-profits and private tutoring over public holidays and weekends was prohibited, significantly affecting both the top line and bottom line of the entire industry. The news saw the bellwether companies in the industry, New Oriental Education & Technology Group and TAL Education Group, fall by over 71% and 73%, respectively, in a week.
