Vocational education isn’t just helping Chinese youth in a difficult job market. It’s also providing a huge boost to China East Education Holdings Ltd. (0667.HK), whose latest financial report issued this week showed steady growth for nearly all of its major metrics, including a nearly 50% rise in its profit.
More importantly for investors, the company’s emergence as one of China’s leading vocational educators has lit a fire under its previously languishing stock, which has more than tripled over the last 52 weeks to a nearly four-year high. But before investors start snapping up these stocks, we should caution that the sector appears to be divided into sector leaders, whose stocks are thriving, and smaller players that continue to languish. More on that shortly.
Vocational school operators were a neglected group in China’s vast education sector for years, as investors flocked toward faster-growing private companies catering to K-12 students and students entering the country’s more prestigious college system. But the former category was wiped out during a crackdown in 2021 that banned most private tutoring services for K-12 students. The latter category has come under pressure more recently as China churns out growing numbers of college students who can’t find jobs after graduation.