TAL Education Group (ADR) (TAL), Momo Inc (ADR) (MOMO): China Bets Pay Off With 36.7% Q1 Gains For This Fund

New Oriental Education & Tech Grp (ADR) (NYSE:EDU)

Tairen Capital lowered its stake in New Oriental Education & Tech Grp (ADR) (NYSE:EDU) by 19% during the first-quarter. Despite this, the fund’s exposure to the company in its 13F portfolio rose to 25.08% from 22.64%, owing largely to a 40% increase in New Oriental Education & Tech Grp (ADR) (NYSE:EDU)’s stock during the first three months of 2017. Like Momo, New Oriental has also continued its bull run in the current quarter and is now trading up by 67.84% for the year.

At the end of last year, Reuters ran a story on New Oriental in which it revealed that eight former employees of the company have accused it of engaging in college application fraud. Following this revelation, shares of New Oriental plunged heavily. However, the company was quick to issue a statement saying that the unit within the company which had been accused of this fraud, New Oriental Vision Overseas Consultancy (NOVO), accounted for only 8% of Momo’s revenue in its fiscal year 2016 and that it would execute on procedures designed to deter and penalize inappropriate employee conduct. For its most recent quarter, the company reported EPS of $0.43, beating analysts’ consensus estimate by $0.02, on revenue of $437.85 million, which was $18.14 million higher than what analysts had expected. The major driver of these better-than-expected numbers was New Oriental’s Educational programs and services division, whose revenue rose by 26% year-over-year.

Being one of the fastest moving stocks this year, New Oriental Education & Tech Grp has been garnering a lot of interest from investors. If you will like to stay ahead of the curve, you can subscribe to real-time email updates on the company by dropping your address in the box below.

TAL Education Group (ADR) (NYSE:TAL)

TAL Education Group (ADR) (NYSE:TAL) is another China-based education company that accounted for a large share of Tairen Capital’s equity portfolio at the end of March. It’s also another stock that has done exceedingly well this year. Although the fund booked some profit from its TAL Education Group (ADR) (NYSE:TAL) position during the first-quarter by selling 7% of its holdings, its exposure to the company in its 13F portfolio rose to 20.22% from 14.91% during that time. TAL’s stock has been on a consistent uptrend since 2013 and is up by a whopping 1,070% over the last five years. This year alone the stock has returned 76.31% so far.

The unprecedented growth in the demand for K-12 extracurricular training in China has worked wonders for TAL in the past five years and analysts expect this trend to continue in the coming years. Although there are several new EduTech start-ups in the country and the K-12 training space has become increasingly competitive, TAL has some unique advantages which should ensure that it remains one of the leaders in the industry for a long time. Some of these include its standardized model for hiring and training teachers, which helps in reducing costs, established learning centers in prominent locations in most big cities, and better online and offline infrastructure than its peers. Most analysts who currently track TAL are bullish on the company. The stock sports an average rating of ‘Buy’ and an average price target of $130.79 from 15 leading analysts on Wall Street who track it, more than 5% above the stock’s current price.

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