Analyst Note
| Jenny Tsai |We believe the measures announced by the Chinese government on July 24, 2021 to alleviate stress for students in mandatory education and after-school tutoring will impact the business model of some private sector education companies. The China Ministry of Education announced on Sept. 7, 2021 that all after-school tutoring companies are required to become non-profit organizations before year-end 2021 and implemented a price hike cap of 10%. Most of the after-school tutoring companies are still in discussions with their legal team and local government on the structure required by the central government, so investors lack visibility into the future cash flows of the business.