Shares in Four Seasons Education Tumble 7% on Lower Revenue, Income

The Chinese provider of afterschool tutoring has suffered from regulatory changes that limited the prepayment of courses to a three-month period.

Author: Belinda Zhou   

A Chinese afterschool math education service provider, Four Seasons Education (Cayman) Inc. (NYSE: FEDU), posted its financial results for the first fiscal quarter Tuesday, sending its shares down 7 percent to close at $1.68 apiece.

The Shanghai-based company said its revenue in the three months through May reached $12.4 million, down 1 percent from the same period of 2018. Net income was $600,000, or 1 cent per American depositary share, 50 percent lower year-over-year.

While Four Seasons Education said it achieved its own estimated guidance, the weakening left investors disappointed.

Total student enrollment reached 69,000 during the quarter, at an increase of 53 percent from the same period last year, primarily due to the increased course offerings, compliance with regulations and the expansion of its physical learning center network, according to the report. Four Seasons Education said the new government policy which limits the prepayment of a curriculum registration to three months attributed to the increase of students in the quarter. Meanwhile, it added three additional learning centers to a total of 52 in its network.

"With a focus on math-related courses as our core educational offering, we maintained our healthy growth momentum of student enrollment across course subjects," Peiqing Tian, the chief executive officer of Four Seasons Education, said.

He added, "With math as the anchor subject of our increasingly diversified portfolio of course offerings and trustworthy program quality as our strength, we are devoted to capturing tremendous opportunities in the K-12 afterschool market by delivering engaging courses and enjoyable learning experience to students at different age groups."

Looking ahead, Four Seasons Education seeks to generate revenue in the range of 121.4 million yuan to 126.1 million yuan, or approximately $17.6 million to $18.3 million, in the second quarter of fiscal 2020, representing year-over-year growth of approximately 30 percent to 35 percent.