Latest Chinese IPO On Deck — EDU

New Oriental Education (EDU) will be the latest Chinese stock to be listed on the big board. According to IPOHome.com, EDU will offer 7.5 million American Depositary Shares (ADS) at a range of $11-$13 and the stock will start to trade on Wednesday, September 6.

EDU’s main business is test preparation. As tens of thousands of Chinese students taking foreign language tests (such as TOEFL and GRE) every year， EDU has enjoyed tremandous growth since it was founded in 1993. I had some personal experience with EDU in the early 1990’s when I was preparing to take TOEFL and GRE. At that time, EDU was more like a evening school renting classrooms from local universities to offer test preparation courses. Every classroom was packed with more than two hundreds students and teachers had to use loud speaker so students in the last row could hear them. The condition was tough, but they built a good reputation among Chinese students who want to pursue further education in countries like US, UK, and Australia, with US being the biggest destination. If you go to any university in US and ask a Chinese student about EDU, chances are he/she not only knows it, but also is a student of EDU.

However, like investing in any emerging market, caution has to be excercised when you consider investing in Chinese stocks. Though the 10+% annual GDP growth makes China one of the biggest magnet of capitals, regulatory and accounting issues are always of concerns. And Chinese stocks are more volatile.

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