A Hong Kong-listed private education company with operations in the Greater Bay Area is expanding its colleges in mainland China as it takes advantage of the transport network, state support and cheap land amid a regulatory storm in the industry.
Edvantage Group Holdings is expanding its Zhaoqing campus in Sihui, which it opened last September, and also the vocational college in Jiangmen's Xinhui district that will start receiving students next month, company executives said. The two universities have a capacity to enrol about 70,000 students.
"A key advantage of Zhaoqing and Jiangmen is that they have ample land and a young population, which is ideal for privately-run university businesses," said Liu Yi-man, chief executive of Edvantage Group.
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Chief financial officer Simon Wong Shing-mun concurred, saying expanding the Zhaoqing and Jiangmen campuses made sense as their land and construction costs were cheaper than other more developed cities such as Shenzhen.
"The development of high-speed trains and highways has shortened the travel time to within an hour between the 11 cities in the Greater Bay Area, making it easier for students from other cities in Guangdong to go to Zhaoqing and Jiangmen to study," Wong said.
Edvantage has a market value of HK$6.34 billion (US$816.4 million). The stock fell 11.6 per cent last week and 24 per cent in July as China's crackdown on after-school tutoring last week led to a across-the-board slump in Hong Kong. At HK$5.92 on Friday, the stock has more than doubled its IPO price of HK$2.85 two years ago.
Liu said Edvantage would not be affected by the regulatory tightening, as the new policies do not impact higher education.
Morgan Stanley last week rated Edvantage "overweight" and set a price target of HK$10.10, as the US investment bank expected the company to continue to profit from higher student enrolment and tuition fees.
Since 2019 Beijing has introduced many measures to promote talent and capital flow within the Greater Bay Area, which includes nine cities in southern Guangdong province, Hong Kong and Macau in a bid to create an powerful and vibrant economic zone.
Zhaoqing is the poorest among bay area cities in economic terms, but the largest in terms of land area. Spread over 15,000 sq km, 70 per cent is covered by scenic forests, lakes and rivers, making it a magnet for millions of tourists every year.
Edvantage's private university in Zhaoqing offers courses in tourism and hospitality, which makes sense to expand the campus as the city has a lot of hotels and other tourist activities to provide internship and job opportunities for graduates, Liu said. Jiangmen, on the other hand, is a manufacturing base which can provide job opportunities for graduates, she added.
Edvantage also operates the Guangzhou Huashang College and Guangzhou Huashang Vocational College in Guangzhou in Guangdong province.
The province has about 700,000 students attending the mainland's university entrance exam every year, the second-highest of all provinces in China, the company said citing government data. However, there are only about 200,000 public university places there, giving room for privately run universities like Edvantage to coexist, it added.
While China has public universities that charge only a few thousand yuan per year, many are willing to pay almost 10 times more to enrol in Guangzhou Huashang College that charges about 30,000 yuan (US$4,650) per year.
Liu said public universities focus more on research while Edvantage's colleges offer courses on accountancy, finance and hospitality, which equips students with skills to be employed.
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