SHANGHAI :
RYB Education's Stock Price Halves After China Clamps Down on Kindergartens
Liao Shumin
DATE:  Nov 16 2018
/ SOURCE:  Yicai
RYB Education's Stock Price Halves After China Clamps Down on Kindergartens RYB Education's Stock Price Halves After China Clamps Down on Kindergartens

(Yicai Global) Nov. 16 -- Shares of RYB Education, China's biggest private kindergarten operator, fell 53 percent in New York after the Chinese government unveiled regulations to stop private nursery listings and curb excessive profit-seeking in the preschool sector. Stocks of other Chinese education companies also dropped.

The regulations, released yesterday, state that social capital should not control kindergartens and non-profit kindergartens set up by state-owned or collective assets through merger and acquisition or franchising. The educational ministry will take action against violators and block them from issuing additional shares until corrections have been completed.

Shares of Beijing-based RYB Education [NYSE:RYB] ended trading yesterday at USD7.83. Bright Scholar Education Holdings, headquartered in Foshan, lost over 17 percent in New York.

The new rules are also expected to impact other listed education providers such as Vtron Group, Jiangsu Xiuqiang Glasswork, Xinnanyang Only Education & Technology and Qunxing Toys. In Shenzhen today, Vtron [SHE:002308] fell by the daily exchange-imposed limit of 10 percent to CNY5.28 (76 US cents).

For-profit kindergartens that participate in such activities as M&As, franchising and joining operational chains must make their deals public with official authorities higher than the county-level. Local authorities must also conduct strict reviews on the qualifications, aims, curriculum resources and corresponding amounts and scales as well as the managing capabilities of relevant companies and kindergartens.

Kindergarten operators and franchisers must also apply for qualifications related to model kindergartens.

Editor: Willian Clegg

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Keywords:   RYB Education,Kindergarten,Merger,Policy