Puxin Limited (NEW) is worth a look with 55% upside

Puxin Limited (NEW) is a China-based provider of after-school education services. The Company provides kindergarten to twelfth grade (K-12) and study-abroad tutoring programs in the way of classroom-based tutoring and through online and mobile applications. The company operates its businesses in the domestic market.

Its worth getting in on NEW stock under $1

All education companies are booming right now since the pandemic started, its highly worth it if you’re a firm believer in Puxin to get in on this stock under $1.

The company recently announced that it has received a compliance notification from the NYSE Exchange, it notifies the company that they need to be above $1 requirement. If you get in now at $0.70 and they meet that $1 requirement again that would be an easy 45% gain.

Education in China may still have a way out of the mud

U.S.-listed after-school tutoring giants New Oriental Education & Technology and TAL Education have plunged by 90% this year. In July, Chinese authorities abruptly banned school-age tutoring businesses from operating on weekends and holidays, and ordered them to restructure as non-profits.

Despite the new rules, both companies have “ample cash” to expand into new businesses like non-academic tutoring, Morgan Stanley equity analysts Sheng Zhong and Elsie Sheng said in an Aug. 29 report.

They upgraded New Oriental to “overweight” and predict shares can soar by 55%, even after cutting the price target to $3.50. The company has already launched courses in art and speech, and is recruiting for dance, music and calligraphy classes, the report said.

The more lucrative future for Chinese education companies will be in vocational training, especially given government support for the sector that includes plans to establish a nationwide exam system for the segment, the Morgan Stanley analysts said.

They predict the vocational education market will grow by a compound annual growth rate of 7% in the decade from 2020 to 2030.

Chinese officials have spoken frequently in recent months about the need to help people find jobs. In addition to the disruption and uncertainty brought by the coronavirus pandemic, the country needs to address the impact of a rapidly aging population, and a large mismatch between business needs and employees’ skills.

The Morgan Stanley analysts’ top pick in this segment is Hong Kong-listed China East Education, which they rate “overweight” and predict gains of nearly 70% to a price target of 14 Hong Kong dollars ($1.80). Shares have dropped more than 50% so far this year.

“The company will benefit from the vocational education promotion tailwind in China with its excellent reputation for training outcomes and subsequent employment opportunities,” the report said. “We believe both revenues and margins will gradually recover following Covid in 2020, especially with the new majors rolling out, which are mainly 3-year classes to reduce business volatility.”