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Four Seasons Education Reports Decline in Profit, Stock Dips 2% in Early Trading

Chinese after-school education company reported its financial results for the fourth fiscal quarter today, sending the stock of the company to slide 2 percent in early trading.

Anna Vodopyanova
    May 16, 2018 10:46 AM  PT
Four Seasons Education Reports Decline in Profit, Stock Dips 2% in Early Trading

Four Seasons Education (Cayman) Inc. (NYSE: FEDU) announced its earnings for the fourth fiscal quarter ended Feb. 28 declined 18 percent year-over-year, sending the stock of the Chinese after-school math education company down 13 cents in early trading Wednesday.

The company said net income in the last three months of its fiscal year was $430,000, or 1 cent per American depositary share, compared with $520,000, or 1 cent per share, for the same period last year.

Responding to poor earnings results, the stock of the Shanghai-based company fell 2 percent in early trading to $6.90 per share, before recovering slightly to $7.00 by mid-afternoon Wednesday.

Revenue of Four Seasons exhibited growth in the fourth fiscal quarter, with a 40 percent increase to $10.6 million, thanks to a 25 percent rise in student enrollment year-over-year.

The chairman and chief executive officer of Four Seasons, Peiqing Tian, attributed the increase in enrollment to a diversification of programs and courses for students of different age groups, and to the expansion of the company's network outside Shanghai.

At the end of February, Four Seasons had 38 learning centers, 10 more than a year ago. Student enrollment increased to 16,000, compared with nearly 13,000 last year.

Enrollment could have been even higher if it wasn't for China's new policy limiting certain types of academic competitions, according to the director and chief financial officer of the company, Yi (Joanne) Zuo. "In compliance with the new policy, some of our courses were restricted to open enrollment to our existing students only," she said in a statement.

Zuo also noted that the company's higher sales and marketing expenses, a 97 percent increase to $3.9 million in the fourth fiscal quarter, were mainly a result of student promotion expenses outside Shanghai, as well as "proactive efforts to build a business development team for our nationwide expansion."

For the full year, the company said revenue grew 48 percent to $47.5 million, while earnings gained 141 percent to $6.6 million, compared with fiscal year 2017.

In the first fiscal quarter of 2019, CEO of Four Seasons Tian said the company expected to complete the purchase of 90 percent "of a renowned early childhood education provider in Shanghai" to advance its plans in expanding into pre-school tutoring.

"We have been actively shifting our operations to cover wider age groups and more subjects, with a goal of keeping our position and competitive edge in the evolving market," Tian said.

The company said in the first fiscal quarter it expected to generate revenue in the range of $14.1 million to $14.7, representing year-over-year growth of 30 to 35 percent.

Four Seasons began trading publicly on the New York Stock Exchange in November. As of May 16, the company had 48 million ADSs outstanding. Each two ADSs represent one ordinary share.

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Responding to poor earnings results, the stock of the Shanghai-based company fell 2 percent in early trading to $6.90 per share, before recovering slightly to $7.00 by mid-afternoon Wednesday.

(Source: Thomson Reuters Eikon)

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