Portfolio | China’s booming international school business untouched by slowdown

China’s rich “tiger parents” are becoming money spinners for the country’s private education providers, particularly international school operators that pave the way for their kids to top Western universities, an industry hardly touched by the economic downturn.

“China’s education market is huge and is only going to get bigger. Rising wealth, demand for skilled labour, the one-child policy and an obsession with brand-name universities are positive catalysts,” CLSA analyst Mariana Kou wrote in a note to clients. “We expect international schools that accept local students to register the fastest growth.”

That has led Kou to overweight China’s private education sector as a whole and a 27 and 39 per cent projected upside for three of the four stocks she covers. Among the top picks are New York-listed educational services provider New Oriental, Nord Anglia, and China Maple Leaf, China’s largest international school operator listed in Hong Kong.

International schools in China, rather than just catering to expatriates, are a coveted destination for well-off locals as well. Some 90 per cent of Maple Leaf’s 15,000-odd students come from Chinese families. That pattern of intake is becoming increasingly common for international schools in China.

Last year, 177,400 students were enrolled in international schools in the country. “This segment is poised to expand the fastest [in education sector] at an 11 per cent compound annual growth rate over 2015 to 2018,” Kou said.

The proliferation, according to Kou, is largely thanks to Chinese parents’ desire to send their children overseas, which has also proved to be a boon for the country’s informal online and after-school tutorial businesses.