2007 has been loaded with Chinese companies tapping the U.S. market for their IPOs. Several solar energy plays and online gaming developers have gone public this year, so why not a Web-based education specialist?
ChinaEdu filed to go public last night. From its executive offices in Beijing, ChinaEdu enables several universities in China to offer online degrees. The company also offers Web-enabling tools for elementary schools.
ChinaEdu is relatively small. It posted a profit of $1.6 million on revenue of roughly $15.8 million through the first six months of the year. However, Internet education specialists like ChinaEdu and Ambow have clear upside potential, making them easy "story stock" candidates.
It doesn't hurt that the market has taken nicely to New Oriental Education
New Oriental posted stellar fiscal first-quarter results last month. The private education leader saw revenue climb 50% higher to $81.1 million, with profits soaring 63% higher to hit $33.9 million.
Obviously, ChinaEdu is a much smaller player in post-secondary education than New Oriental, but you can't blame it for hopping on while the coattails are still hot.
Besides, there doesn't have to be just one winner here. If domestic specialists like DeVry
ChinaEdu will have to earn a market premium, of course. ChinaCast
ChinaCast isn't a financial dud. It posted top- and bottom-line gains of 25% and 66%, respectively, in its latest quarter. Coattails, apparently, don't always travel at the same speed as the coat's wearer. Let's see how artfully ChinaEdu hops on.
New Oriental Education is a Global Gains recommendation. A free 30-day subscription offer is available so you, too, can get smarter about your global stock picks.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin gaming stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.