Update on Kaiwen Education's Financial Status​​

​Recent Wall Street Journal reports indicate that the Chinese economy is not doing well, a function of the on-going trade war, U.S. efforts to contain the country's technology sector, and Beijing's efforts to reduce very high business and government debt. https://www.wsj.com/articles/chinas-economy-shows-fresh-signs-of-weakness-11560512903 AND https://www.wsj.com/articles/as-china-auto-sales-slow-industry-braces-for-new-regulations-11560332730

This is a significant development for for-profit Kaiwen Education, which has struggled unsuccessfully since its inception to achieve profitability. The company has regularly alerted regulators and current and prospective shareholders that a key business risk - in addition to legislation on for-profit education in China still in the draft stage - is China's macroeconomic environment.https://www.rideraaup.net/kaiwen-announcement-11119.html

China's targeted GDP growth for this year is the lowest projection in a quarter of a century. Retail sales there fell to a 16 year low in April, and auto sales declined for the 11th straight month in May and were 16% lower than a year earlier. The slump in demand for new autos - a key economic indicator - shows no signs of easing, according to the Journal. https://www.wsj.com/articles/chinas-economy-shows-fresh-signs-of-weakness-11560512903 AND https://www.wsj.com/articles/as-china-auto-sales-slow-industry-braces-for-new-regulations-11560332730

Kaiwen's vulnerability arises because, in China, the company is a new entrant in an established and very competitive international education school field. We have shown that its two Beijing K-12 schools are not ranked highly among international education schools in Beijing or China. Further, the company depends almost entirely on tuition revenue from its schools and is expensive to attend. Kaiwen has expenses that require it to have school tuition that is the highest among Beijing's international K-12 schools. https://www.rideraaup.net/kaiwen-announcement-11119.html AND https://www.rideraaup.net/kaiwen-education-2018-annual-report.html?fbclid=IwAR2L4jzb-VB5DACtO8FGMQPMZZkQiu8Ah5Bjfm34PGnNheY8fKIA7YuN7FQ

 Kaiwen's school enrollment remains problematic. In a mid-June meeting with representatives from four Chinese stock funds Kaiwen reported total school enrollment of 1221 students for the ending school year, and reported school capacity to be 5500 students - a capacity 100 students less than it has reported in the past. Of course, reporting a lower school capacity enables the company to show itself to be more fully enrolled than it is - i.e., 22.2% rather than 21.8% when the 5600 student figure is used. http://stock.eastmoney.com/a/201906141151817072.html

This level of enrollment after three years of operation reveals that Kaiwen's schools have not established the competitive advantage over other schools the company touts in its public relations releases and reports to government regulators. https://www.rideraaup.net/kaiwen-announcement-11119.html 

Kaiwen remains a start-up company in precarious financial condition, with a very uncertain future. For these reasons, and for many others we have discussed, this company remains a significantly unsuitable owner and operator of Westminster Choir College. https://www.facebook.com/rideraaup/?epa=SEARCH_BOX

​6/24/2019