(Yicai Global) Aug. 4 -- Shares in Doushen Education & Technology soared by almost 20 percent today after the Chinese online education company said it was dumping its main business of extracurricular school classes in the face of a government clampdown to reduce the burden on the country’s school kids and turning to non-academic subjects such as the arts instead.
Doushen Education’s share price [SHE:300010] surged 19.9 percent to close at CNY4.70 (USD0.73), giving it a market capitalization of CNY4.1 billion (USD631.5 million). The company’s stock had slumped 30 percent in the two days after the crackdown was announced on July 24.
Doushen Education will shift to general courses about the arts, the performing arts and the appreciation of artistic works, the Beijing-based online educator said today. It will still offer a business section which includes the provision of online video lessons for schools.
E-educators are not allowed to provide courses to students from kindergarten to 12th grade after school hours, on public holidays, weekends and during the holidays, regulators said in a set of guidelines issued on July 24 with the aim of reducing the study workload during compulsory education years.
Doushen Education is halving the number of brick-and-mortar training schools it had to 42, the company said. It expects the changing landscape to greatly affect profit and revenue, it added. Last year the firm logged net profit of CNY350 million (USD54.2 million) on revenue of CNY1.18 billion (USD182.6 million).
Other leading e-educators New Oriental Education and Technology Group and TAL Education have been rushing to open businesses in different sectors to find new sources of income that are in line with regulations.
Editor: Kim Taylor