New Oriental Education Debuts on Hong Kong Markets, Shares Surge on First Day

(Source: CICC)

Chinese private education giant New Oriental Education & Technology Group (NYSE: EDU) officially started trading on the Hong Kong Stock Exchange on Nov. 10 and became the first stock to exceed HK$1,000 on the market. Credit Suisse, BofA Securities and UBS are the joint sponsors and global coordinators of the offering. 

New Oriental’s Hong Kong debut opened at HK$1,381 (approximately $178) on the morning of Nov. 10, Beijing time, surging sharply from the set offer price of HK$1,190 per share, witnessing a rise of about 16.1%. The shares closed at HK$1,365 on the first day of trading. The public offering of the company has been oversubscribed 1.55 times by local buyers and 6.4 times by international investors. The company’s American Depositary Shares (ADSs), each representing one common share, will continue to trade on the NYSE and the Hong Kong shares will be fully fungible with the ADSs listed on the NYSE. 

Established in 1993, the Beijing-based education provider has been listed on the New York Stock Exchange (NYSE) as early as 2006. “We believe Hong Kong’s increasingly significant role as a global financial hub will enable New Oriental to achieve breakthroughs and reach new milestones,” Michael Yu, founder of New Oriental Education commented on why the New York-listed company chose to make the secondary listing in Hong Kong. 

The past three years saw a robust growth of the education giant. For the past three fiscal years ending on May 31, 2020, New Oriental’s net revenue compounded annual growth rate reach 20.9%. But under the pandemic-impacted gloomy environment for education agencies, New Oriental was also affected. As revealed in the prospectus, New Oriental’s net revenue for the fourth quarter of 2020 was down 5.3% year-on-year while in the first quarter of the fiscal year 2021, its net revenue fell by 8% year-on-year.

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New Oriental stated in the prospectus that since the end of January 2020, the company has stopped all operations in its offline study centers and adopted the online-merge-online (OMO) mode, shifting towards small-scaled and live-streamed classes to reduce the impact of COVID-19. According to the prospectus, the company is looking to enhance the AI-backed education technology after the Hong Kong trading and continue to expand its services including pre-school education, K-12 education, etc.