China’s Education Stock Survives 95% Crash, Attracts $35M Investment

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New Oriental Education & Technology Group (EDU +0.54%) has drawn a significant bet from Singapore-based Serenity Capital Management, which increased its stake by $21.6 million, according to a November 13 SEC filing.

The Event

On November 13, Singapore-based Serenity Capital Management acquired 411,380 shares of New Oriental Education & Technology Group during the third quarter. The total holding now stands at 656,878 shares, valued at $34.9 million as of September 30. This makes New Oriental the fund’s fifth-largest position among eight reported holdings.

Context

The fund’s purchase represents 8.8% of its 13F reportable assets under management. Top holdings after the filing include NASDAQ: BZ ($117.6 million), NYSE: ZTO ($97.1 million), and NYSE: TAL ($53 million), with EDU at $34.9 million.

As of Friday, EDU shares traded at $55.67, down 5.3% over the past year. This underperforms the S&P 500, which rose 16.5% in the same period.

Company Overview

Metric Value
Price (as of Friday) $55.67
Market Capitalization $9.3 billion
Revenue (TTM) $5 billion
Net Income (TTM) $367 million

Company Snapshot

  • New Oriental Education & Technology Group provides private educational services, including test preparation, tutoring, language training, and online programs across China.
  • Revenue comes primarily from tuition fees, educational materials, and consulting services.
  • The company targets students from pre-school to college age, focusing on K-12 and test preparation markets, as well as overseas study preparation.

New Oriental operates an extensive network of schools and learning centers, offering diverse services to adapt to evolving educational demands. Its scale and range of offerings provide a competitive edge in the Chinese education sector.

Strategic Assessment

In a concentrated portfolio with just eight positions, increasing exposure to a stock that lost over 95% of its value signals a willingness to accept regulatory risk for long-term durability and cash flow. This is not a speculative move but a bet on survival and adaptation.

The company has transformed since its 2021 peak. Following China’s crackdown on for-profit tutoring, it shifted to adult education, overseas test prep, and consulting. First-quarter fiscal 2026 revenue rose 6.1% to $1.52 billion, with operating income up 6% to $311 million. Non-GAAP operating margin improved to 22%, reflecting tighter cost control.

The balance sheet shows strength: over $1.2 billion in cash, with management pledging to return at least 50% of annual net income to shareholders via dividends and buybacks.

In a portfolio dominated by Chinese internet and education names, this position sits alongside peers facing similar policy risks. For long-term investors, the lesson is clear: a scaled, profitable survivor can still grow from a smaller, more resilient base.

Glossary

13F reportable assets under management: Assets disclosed in quarterly SEC Form 13F filings.
AUM (Assets Under Management): Total value of investments managed by a fund.
Stake: Ownership interest in a company.
Compound annual growth rate (CAGR): Average yearly growth rate over a specified period.
Forward P/E: Price-to-earnings ratio using forecasted earnings.
EV/EBITDA: Enterprise value divided by earnings before interest, taxes, depreciation, and amortization.
Buy (in fund context): Increasing holdings in a security.
Top holdings: Largest investments in a fund’s portfolio.
TTM: 12-month period ending with the most recent quarterly report.
Test preparation: Services aiding students in standardized exams.
Educational materials: Textbooks, workbooks, or digital resources.
Learning centers: Physical locations for educational services.

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2025-12-19 23:22