New Oriental has split the online business into an independent company

Summary: View the latest quotes: MR, an industry veteran, said today in Seekingalpha, an investment information website in the US, that the new Oriental has split its online business into an independent company, even though it currently accounts for the new Oriental total revenue

View the latest quotes

Lead: Doug Young, an industry veteran, said today in Seekingalpha, an investment information website in the US, that New Oriental has split its online business into an independent company, and that the new Oriental will invest heavily in Mr, although the current share of the new Oriental total revenue is small. Moreover, the new company is likely to be listed in the next 2 to 3 years. At the same time, larger, slower-growing parent companies will opt for privatisation.

The following is a summary of the article content:

Online education has become a hot topic today, this is mainly due to two events reported: first, the world's leading online education platform and the largest online English learning institutions tutorgroup access to an important new investment, the second is the new Oriental has split the web business unit, may be ready for the final IPO (initial public offering).

The two news highlights the enormous potential of China's online education market, which attracts the attention of more than 600 million Chinese netizens and various educational services. Online education services not only meet the needs of millions of of internet users in small cities that have not yet been covered by large educational institutions, but are more economical than traditional core education services (based on training services in physical classrooms).

Let's take a look at the news about new Oriental first. New Oriental has been the darling of investors, but due to the fierce competition in the education market in China, the new oriental business growth slowed down, resulting in weaker stock performance than the market. Its share price has been falling since the US securities regulator launched an investigation into new Oriental in 2012. But last year, new Oriental shares rebounded 50% per cent, spurred by a collective rally in the NYSE-listed stock market.

Still, the company's CEO, Mr Yu, last year hinted that the new Oriental might consider privatisation, as investors generally expressed indifference to new Oriental equities. Many of the shares listed on the NYSE have been privatized since their share prices have been undervalued.

Foreign media reported today that the new Oriental has split the online business into an independent company, the new company name is "Beijing New Oriental Fast journey." At present, this part of the business accounted for the total revenue of the new Oriental proportion is not large, but the new Oriental plan to invest heavily in the business.

If new Oriental can quickly expand the business and achieve strong profits, I think the new company is likely to be listed separately in the next 2 to 3 years. At the same time, larger, slower-growing parent companies will opt for privatisation.

Let's say TutorGroup the news. Today, it is reported that the education platform, online English learning institutions TutorGroup has completed the B round of financing, access to Alibaba, Singapore investment company Temasek and Qiming Venture investment of nearly 100 million dollars. Last year, Alibaba began a massive foray into the education services market, and published a "classmate" platform dedicated to providing Third-party education services.

According to TutorGroup, it has been providing online education services for 10 years and currently covers 40 countries worldwide. TutorGroup said it would use the new funds to accelerate the development of business in Asia and the Americas. In view of China's strong influence in the international arena, besides providing English language education, TutorGroup also hopes to provide Chinese education services.

TutorGroup has not disclosed whether the company is profitable, and the size of its revenues, but based on its rapid expansion and the fact that it has gained new investment, the company is likely not yet profitable. As for revenue, I expect to be around 200 million dollars a year.

So what's the next step for TutorGroup and New Oriental's new online division? As I said before, I think the new Oriental will invest heavily in the online sector over the next few years to boost its share performance and possibly even expand overseas through the sector.

As for TutorGroup, it is likely to use the latest funding to expand the business and to gain profits. If these two points are successful, TutorGroup will be IPOs overseas as early as next year.