ChinaEdu Corporation (CEDU), an educational services provider in China, reported second quarter financial results yesterday afternoon that sent its stock soaring 20.7% today, closing at $4.67 on more than twice its normal trading volume. Revenues in the quarter rose 24.9% year-over-year to $11.6 million. Net income was $1.3 million, or 7 cents per ADS, a decline of 40% year-over-year from $2.2 million. The decrease in net income was attributable to a higher tax rate in the quarter, and increased expenses related to the company’s expansion plans. Analysts expected earnings of 6 cents per ADS on $10.3 million in revenues.
Ms. Julia Huang, ChinaEdu’s Chairman and Chief Executive Officer said, “We are pleased to report another strong quarter driven by our focused strategy to grow student enrollment and service revenue. Our second quarter financial results reflect strong organic growth in our online degree program services resulting from our expanded course offerings and our ability to partner with well-recognized universities throughout China. We recently signed eight new contracts, bringing us to a total of 20 partnerships with leading universities across China.
“We have been offering recruitment and support services to the new partner institutions through our learning center network, and we remain one of only three institutions approved to operate such a network in various cities and provinces throughout China. We continue to invest in expanding our learning center network, as we believe this will further boost student enrollment in our online degree programs and generate significant additional revenue in the long term.” Ms. Huang added.
The average number of students enrolled in ChinaEdu’s online courses rose 25% to 125,000 over the twelve-month period from June 30, 2007 to June 30, 2008. The company issued revenue guidance for the third quarter of $11.4 – $11.7 million. Two analysts surveyed expect consensus Q3 revenues of $10.74 million. Shares of CEDU closed at $4.67 today and have traded in a 52-week range of $3.50 – $10.10. With 20.5 million fully diluted ADS outstanding, CEDU has a market cap of $95.7 million.
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