Tutorial firm teams up with Taiwanese peer
Modern Education and High Luck to introduce each other's study plans into own markets
The tutorial operator Modern Education is developing new study programmes for primary and secondary students in China to try to cushion the impact of local education reform which drove its interim earnings down by almost 62 per cent.
The company dismissed speculation yesterday that it was digressing from its education business amid falling income from its secondary school tutoring services, as it unveiled a joint venture with the Taiwanese education group High Luck Management to introduce each others' study programmes into their own markets.
Ignatious Lee Wai-lok, Modern Education's chief operating officer, said business would improve in the financial year ending June 2014, as he expected the joint venture to generate profit after one year.
Lee declined to say if the group would seek more profit by selling its properties. Modern Education raised concerns earlier this year when it became more active buying and selling commercial property. The resignation in March of the group's chairman, Eric Ng Kam-lun, who later slashed his stake in the company from just over 31 per cent to under 5 per cent, added to investors' worries, and the group's share price slumped more than 84 per cent in April to a record low since its listing in 2001 of 20 HK cents. The shares have since climbed back to close at 35 HK cents yesterday after news that it is to tap into Shenzhen's kindergarten market, and on anticipation that the group will launch new projects.
Lee said yesterday that any investment made in the property market was merely a means to hedge the risk of volatility in rents, stressing that the group will stay in its education business. However, it would diversify from its bread and butter tutorial services for secondary school students to tutorials and other classes for kindergarten, primary and secondary students.
In January, Modern Education's co-operation with Beijing Yasi School ended prematurely after the school refused to pay Modern Education a monthly fee of 100,000 yuan for teaching materials.