A number of analysts said Friday they expect the Beijing Olympics to disrupt operations for New Oriental Education & Technology Group, a Beijing-based provider of private educational services in China.
American Depositary Shares of the company slipped $3.64, or 5.2 percent, to $65.92 in afternoon trading. ADRs, or American Depositary Receipts, are securities designed to allow U.S. investors to trade shares of companies based overseas.
Meanwhile, the Bank of New York Asia ADR Index rose 2.24 points, or 1.3 percent, to 164.34, following Wall Street higher after the Commerce Department said personal spending rose 0.2 percent last month and personal income rose 0.2 percent.
Looking at New Oriental, PiperJaffray analyst Mark A. Marostica, who rates the stock "Buy," expects the Olympics to somewhat disrupt its Beijing test prep business for out-of-area students because the Chinese government forbids students to stay in dorms past July 9 for security reasons.
Overall, Marostica said the impact should be modest because New Oriental's Beijing locations will stay open during the Olympics, and parents are likely to keep kids enrolled in English classes, given the importance of learning the language.
Meanwhile, Citi Investment Research analyst Catherine Leung expects the Sichuan earthquake to have a greater-than-expected impact, along with the Olympics, specifically because of class schedules in Beijing, school openings and dorm facilities.
"Student enrollments across the country have softened noticeably since the quakes, especially during the mourning period, as many students and the broader community have focused their time and resources on quake relief efforts," Leung wrote in a client note.
Leung said the earthquakes haven't significantly affected profit and sales in the fiscal fourth quarter, which ends in May, but expects the effect to show up in first-quarter revenue, as some students deferred enrollment.
A representative for New Oriental could not be immediately reached for comment.
Terms & Conditions
RSS Headlines
Fool UK