Understanding the Market | Education Stocks Rise Collectively, YUHUA EDU's Colleges Approved for Profit Transition, Institutions Say It Will Boost Sentiment in the Private Education Sector in the Short Term
Education stocks collectively rose, with China East Education up 6.64%, New Higher Edu Group up 5.98%, YUHUA EDU up 3.28%, and CHINA EDU GROUP up 1.88%. YUHUA EDU's Hunan University of Foreign Economics and Trade received approval to transition to a for-profit model. Guoyuan International pointed out that this move has a short-term uplifting effect on the sentiment of the private education sector and may encourage other schools to consider transitioning. For-profit schools help listed companies with dividends; although short-term costs increase, long-term market revaluation of assets will be achieved
According to the Zhitong Finance APP, education stocks have collectively risen. As of the time of publication, China East Education (00667) is up 6.64%, trading at HKD 7.39; New Higher Edu Group (02001) is up 5.98%, trading at HKD 1.24; YUHUA EDU (06169) is up 3.28%, trading at HKD 0.63; and CHINA EDU GROUP (00839) is up 1.88%, trading at HKD 3.25.
In terms of news, YUHUA EDU Group's Hunan University of Foreign Economic and Trade has recently been approved to transition to a for-profit model, allowing the school to carry out classified registration as a for-profit private school. Guoyuan International released a research report stating that the successful transition of Hunan University of Foreign Economic and Trade serves as a strong demonstration effect for developing provinces. The local education administrative department in Hunan Province has been more proactive in the transition of private colleges, enhancing the willingness of other private schools to transition. By 2025, Hunan has approved three transitions (including foreign-related), providing a reference path for similar provinces, indicating that positive signals have emerged at the policy execution level.
The bank pointed out that for-profit schools are beneficial for listed companies' dividends, alleviating debt through profit distribution. Although the for-profit registration requires the completion of asset transfers such as land and real estate and the payment of back taxes, which increases costs in the short term, it will achieve a market-based revaluation of assets in the long term. Currently, only YUHUA has been approved among listed companies, which will help with sentiment and valuation recovery in the short term. If other listed companies push for similar transitions in the future, it may constitute a long-term revaluation of the sector
