Shares of a Chinese non-profit educational company TAL Educational Group (NYSE: TAL) jumped in trading on Wednesday – a clear belated reaction to yesterday’s news of earnings for the third financial quarter of 2022, in which shares now rose 14.9% as of 11:20 am ET.
TAL reported its earnings on Tuesday morning, but the news was drowned out by headlines about the deployment of Russian troops in Ukraine. As a result, TAL shares did not move much yesterday, gaining only one penny in the share price. Today, when Russian news was mostly digested, investors were free to focus on TAL figures.
But what do these numbers really say? Unfortunately, the news is not good.
Affected by regulation imposed by the Chinese government on the commercial education market last year, TAL’s profit in the third fiscal quarter of 2022 fell 9% year-over-year and the company’s profit in the third fiscal quarter of 2021 ($ 0.02 per year) American depository stock) fell to $ 0.09. -for ADS loss.
This is not good news. On the other hand, however, TAL’s losses in the first nine months of this fiscal year were much higher – $ 1.33 per ad – so at least the rate at which the company is losing money seems to be slowing. Perhaps this is the reason that today the shares have increased.
In addition, TAL noted that in response to government restrictions, it decided to “stop offering subjects to students from kindergarten to ninth grade … in mainland China” and did “complete the termination”. TAL further warns that this exit “will have a significant adverse impact on the company’s revenue”.
However, the management confirms that it can still “continue to operate and develop part of its business other than K9 Academic AST Services, and will explore other possibilities to provide training solutions in accordance with the relevant rules and regulations.”
While the company is struggling to rebuild itself, investors seem to be giving TAL doubts, and believing it will succeed, today.
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Rich Smith has no position in any of these shares. The Motley Fool recommends TAL Education Group. The motley fool has a disclosure policy.
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