Reuters.com recently published an article by Mike Dolan titled “COLUMN-Big funds circle EdTech as post-pandemic mega-trend.”
In it, Dolan writes that “Tech, pharma, climate — and now education.
In the race to pick mega-trends amplified by this year’s pandemic, education, or at least new technology within that market, is being circled by asset managers seeking alternatives to the already super-expensive tech and pharma sectors.
EdTech — which has been growing since universities moved to provide open-access Massive Open Online Courses, or MOOCs, more than a decade ago — is one sector expected to be supercharged by the COVID-19 shock.
And the story goes well beyond emergency home-schooling and online teaching during lockdowns.”
“The investment case centres on two areas of education whose expansion the pandemic is expected to accelerate.
First is the private provision of tertiary or lifelong training as governments struggle to keep funding rising demand, mainly from developing countries. And second is a need for career-long reskilling of workers due to disruptions wrought by automation and digitisation of workplaces.
What has caught the eye of investors — many of whom are also involved in ‘sustainable’ investing, another emerging mega-trend — is the role of EdTech companies in developing artificial intelligence and machine-learning technologies in areas like e-classrooms, virtual reality or interactive modules.”
The article cites that “Sydney-based industry research firm HolonIQ claims global education and training expenditure overall will reach $10 trillion by 2030 from $6 trillion this year — making it more than $1 trillion bigger than the global auto industry by then.
It assumes the next 10 years will see an additional 800 million second-level and 350 million tertiary or higher graduates — largely in Asia and Africa — and a need for 1.5 million additional teachers per year on average.
With that in mind, it estimates EdTech’s share of global education spending will rise from just 2.6 percent in 2018 to 4.4 percent in 2025.”
Dolan writes that: “Many of the leading lights of EdTech are startups or still private, often based in India, China and the United States. The bigger firms have seen revenues balloon and are having little trouble raising finance.
According to reports, the latest fundraising for India’s Byju, a Bengaluru-based startup offering a mobile app that tutors children, values the firm at more than $11 billion. China’s online tutoring start-up Zuoyebang’s latest funding round valued it at more than $6 billion.”
In light of Dolan’s article, let us consider a specific Ed-Tech value stock that is China Education Resources Inc. (“CHNUF”). CHNUF is perfectly poised to cater towards the intensified e-learning market demands which have arisen as a direct result of the COVID-19 pandemic. Based in Vancouver, Canada and with business in China, CHNUF is a publicly-listed ed-tech company (TSX-V – CHN and OTCQB – CHNUF) with leading technology in intelligent system and contents. It provides online/offline learning, training courses, and social media for teachers, students and education professionals; these are all increasingly integral aspects of education in the contemporary era. CHNUF has 2 million kindergarten through twelfth-grade teachers registered through its web portal in China.
CHNUF’s online education platform and services provide a vertically blended learning, teaching, research and management system for a student-teacher-school-parent community. CHNUF’s products and services facilitate a significantly more efficient and enriched virtual educational experience for both teachers and students, most especially during a time when online education has become the backbone of many societies around the world. In combination with the circumstances and demands which have arisen as a result of the COVID-19 pandemic, we believe that China Education Resources’ numerous attributes will provide the Company with great long-term revenue potential.
CHNUF has 47,364,983 common shares outstanding. CHNUF generated US$9,390,402 revenue in 2019. CHNUF made US$978,466 net income in Q2 2020 (earnings per share $0.02).
China Education Resources Inc. (CHNUF) current price is $0.04 per share (P/S Ratio of 0.20, P/E Ratio of 2.0)
In comparison with CHNUF, the ratios of some larger education companies or organizations are as follows: *
|1. Chegg, Inc. (CHGG)||P/S Ratio of 22||P/E Ratio of 5,375|
|2. New Oriental Education & Technology Group Inc. (EDU)||P/S Ratio of 6.8||P/E Ratio of 58|
|3. GSX Techedu Inc. (GSX)||P/S Ratio of 84||P/E Ratio of 700|
|4. TAL Education Group (TAL)||P/S Ratio of 13||P/E Ratio N/A|
|5. Genius Brands International, Inc. (GNUS)||P/S Ratio of 42||P/E Ratio N/A|
|6. Microsoft Corporation (MSFT)||P/S Ratio of 11||P/E Ratio of 35|
|7. NVIDIA Corporation (NVDA)||P/S Ratio of 27||P/E Ratio of 107|
|8. Zoom Video Communications, Inc. (ZM)||P/S Ratio of 232||P/E Ratio of 654|
|9. DocuSign, Inc. (DOCU)||P/S Ratio of 40||P/E Ratio N/A|
|10. Slack Technologies, Inc. (WORK)||P/S Ratio of 19||P/E Ratio N/A|
(*Calculations are based on figures from Yahoo Finance as of Sept. 23, 2020)
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