Recently, the off campus training industry has ushered in the “strictest” new regulations. On July 24, the opinions on further reducing students’ homework burden and after-school training burden at the stage of compulsory education (hereinafter referred to as the opinions) were issued. The opinions put forward relevant opinions on continuously standardizing after-school training (including online training and offline training) and effectively reducing students’ excessive homework burden and after-school training burden at the stage of compulsory education (hereinafter referred to as “double reduction”).
The previous day, the share prices of Hong Kong stocks and zhonggai education listed companies in the capital market had fallen sharply. Wind information data show that on July 23 (the most recent trading day), 15 education stocks such as tal fell by more than 20%, 4 education stocks in Hong Kong stocks fell by more than 20%, and 2 education stocks in a shares fell by more than 7%.
As of July 25, before the press release, among the A-share listed companies, many companies such as doushen education, XueDa education, Qinshang shares and ANGLI education responded to the impact of the “double reduction” policy. Among them, companies with high revenue from discipline counseling business said they would be significantly adversely affected.
For example, Qinshang shares announced that Longwen education, a wholly-owned subsidiary, is one of the main business income and profit sources of the company. As an existing discipline training institution, the positioning of “non-profit organization” and possible price limit measures will have a significant adverse impact on the profitability of Longwen education. Doushen Education said that considering that the proportion of the company’s existing big language learning service business income in the company’s operating income is increasing year by year, the “double reduction” policy will have a significant adverse impact on the company’s operating income and profits.
It is worth noting that the opinions put forward that discipline training institutions shall not be listed for financing and capitalization operation is strictly prohibited; Listed companies shall not invest in discipline training institutions through stock market financing, and shall not purchase the assets of discipline training institutions by issuing shares or paying cash; Foreign capital shall not hold or participate in discipline training institutions by means of merger and acquisition, entrusted operation, franchise chain, use of variable interest entities, etc. Those who have violated the regulations shall be cleaned up and rectified.
Hu Qimu, chief researcher of Sinosteel Economic Research Institute, said in an interview with the Securities Daily that the opinions closed the channel for the listing and financing of discipline education institutions and ended the burning of money for Discipline extracurricular education financing, so as to realize the development model of rapid expansion, and the development model of Education Institutions in the industry is facing adjustment. This has the greatest impact on institutions that have listed financing plans in the short term. However, in the medium and long term, on the one hand, this is conducive to reducing the burden on students in the stage of compulsory education through supply side adjustment, on the other hand, it is also conducive to standardizing the competitive order of the education market and avoiding the disorderly expansion of capital.
“Banning discipline training institutions from listing is actually controlling the exit end of capital.” In an interview with the Securities Daily, a person in the education industry said that if training institutions want to be listed, they will generally go through multiple rounds of capital market financing, and the best way to withdraw capital is to withdraw through the listing of enterprises. If enterprises cannot be listed, the capital will be blocked through the exit channel of listing, which can fundamentally eliminate the capitalization of training institutions.
The Opinions also put forward that the excessive influx of capital into training institutions should be strictly controlled, and the financing and charges of training institutions should be mainly used for the operation of training business. Unfair competition in the form of fictitious original price, false discount and false publicity for the promotion of business should be resolutely prohibited, and the industrial monopoly should be investigated and dealt with in accordance with the law and regulations.
In fact, as early as the national education work conference held in January this year, Chen Baosheng, Secretary of the Party group and Minister of the Ministry of education, said that great efforts should be made to deal with and rectify after-school training institutions this year. The goal of rectifying after-school training institutions is to reduce the burden on students and families, liberate students from after-school discipline tutoring, and liberate parents from sending and accompanying students.
In May this year, the opinions were deliberated and adopted by the 19th meeting of the central deep reform commission. Also from May to June, the State Administration of market supervision successively imposed a fine of 36.5 million yuan on 15 out of school training institutions for false publicity and price fraud. The General Administration of market supervision said that the main characteristics of illegal behaviors of off campus training institutions are “fiction, exaggeration and induction”.
“The opinions will promote the reshuffle of out of school educational institutions.” Chen Li, chief economist of Chuancai securities and director of the Research Institute, said in an interview with the Securities Daily that reducing the schoolwork burden of primary and secondary school students is indeed the general trend. In addition to subjects, children’s education also needs to pay attention to moral education. In recent years, the rise of various training institutions outside school has made many parents more and more anxious. They spend a lot of money to “encourage” their children. At the same time, it has also increased the burden on students and families. Therefore, it is very necessary to rectify the off campus training institutions.
Reprint indicated source：Shine Trader Limited information