TAL Education Q1 Earnings Overview
Online education company TAL Education missed on the big three (revenue, net income, and earnings per share (EPS)), despite topline revenue growth increasing by +42% year-over-year (YoY), as selling, marketing, administrative expenses increased to $336 million from $24 million YoY, which weighed on bottom line net income and EPS. The company only used $13.1mm of its $490.7mm share repurchase program, which is strange to me. Thus far, no analyst has asked management about relisting in Hong Kong. I will provide a Hong Kong relisting update via Twitter (@ahern_brendan).
- Revenue increased +42% to $610 million from $429 million, versus expectations of $632 million
- Adjusted net income fell -85% to $7 million from $48.01 million versus expectations of $50.4 million
- Adjusted EPS fell -85% to $0.01 from $0.08 versus expectations of $0.08
Key News
Asian stocks were lower, except for Vietnam, which outperformed the region. This followed roller coaster comments yesterday, as President Trump suggested tariff rollbacks could be in the cards soon.
China’s Ministry of Commerce (MoC) threw cold water on President Trump’s suggestion that talks are already in motion. The MoC said, “There are no economic and trade negotiations between China and the United States, at present”. The comments indicate a lack of understanding that the “Art of the Deal” requires Kabuki theatre, drama, and showmanship. Hopefully, the two sides will communicate with one another at the IMF and World Bank meetings in DC this week.
Premier Li and the State Council once again reiterated that it is necessary to “stabilize the stock market and continue to promote the stable and healthy development of the real estate market.” Mainland media outlet Yicai noted that US shipments of liquid natural gas (LNG) to China went to zero in March, versus 412,500 tons in March of 2024, as China’s 99% LNG tariff and 94% oil tariff take hold. The European container shipping index futures fell -9% overnight. It is hard to know whether fewer boats going to the US means more supply for Europe, leading to the price decline, or indicating the trade war is weighing on the global economy. Regardless, the two sides should get talking, in my humble opinion!
Without question, the biggest news was declines in Meituan and JD.com shares, which fell -5.15% and -6.19%, respectively, overnight, as JD reported a substantial uptick in its new restaurant delivery service. The likely price war is apt to weigh on the companies’ financials. JD.com, as the leader in online electronic sales, was well-positioned to benefit from the new electronic subsidies through the expansion into restaurant delivery, curbing investor enthusiasm. The price action seems to be an instance of “shooting first and asking questions later, ” as investors recall self-defeating battles, including that between Didi and Uber. Internet stocks were off, as defensive plays such as banks, nonferrous metals, mining, and telecom outperformed. It is worth noting that Southbound Stock Connect had $436 million worth of net buying, concentrated in Alibaba and Meituan.
Mainland investors now hold 8.64% of Alibaba’s shares outstanding. Southbound Stock Connect’s percentage ownership continues to rise. Tencent is 11.78% owned by Mainland investors, Kuaishou is 15.76% owned, and Meituan is 10.96% owned, based on shares outstanding. Today, 43% of Hong Kong’s turnover was via Southbound, which indicates the lack of foreign investor participation, which was out of sight, and out of mind.
Mainland China had a non-eventful night, as banks and insurance outperformed, battery giant CATL gained +1.51%, and Midea gained +1.53%. These were rare growth outperformers in the current market. Software and technology, including electronic equipment and communications equipment, underperformed. The National Team’s favored ETFs had very light volumes. Carmaker BYD reports tomorrow.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.7% |
| Hang Seng Tech | HSTECH Index | -1.5% |
| Hong Kong Turnover | HKTurn Index | -21.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -25.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 13% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -64.4 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | -0.7% |
| China (STAR Board) | Star50 Index | -0.9% |
| Mainland Turnover | .chturn Index | -10.1% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.3% |
| Japan | NKY Index | 0.5% |
| India | SENSEX Index | -0.4% |
| Indonesia | JCI Index | -0.3% |
| Malaysia | FBMKLCI Index | 0.4% |
| Pakistan | KSE100 Index | -1.7% |
| Philippines | PCOMP Index | -0.2% |
| South Korea | KOSPI Index | -0.1% |
| Taiwan | TWSE Index | -0.8% |
| Thailand | SET Index | -0.6% |
| Singapore | STI Index | 0% |
| Australia | AS51 Index | 0.6% |
| Vietnam | VNINDEX Index | 1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today’s Volume % of 1-Year Average | 146% | 1 |
| Advancing Stocks | 370 | 3,009 |
| Declining Stocks | 111 | 1,965 |
| Outperforming Factors | Liquidity, Momentum, Large Cap, Growth | Liquidity, Momentum, Small Cap, Growth |
| Underperforming Factors | Value, Dividend Yield | Low Volatility, Value, Quality |
| Top Sectors | Tech, Discretionary, Communication | Discretionary, Tech, Industrials |
| Bottom Sectors | Real Estate, Materials | Real Estate, Communications, Materials |
| Top Subsectors | Tech Hardware, Consumer Services, Auto | Auto Parts, Motorcycle, Industrial Machinery |
| Bottom Subsectors | Telecom, Non Ferrous Metals | Precious Metals, Agricultural, Retail |
| Southbound Connect Buys | Meituan (moderate) | |
| Southbound Connect Sells | HK Tracker ETF and HS China Enterprise ETF (massive), China Mobile (large), Xiaomi (moderate), Alibaba, SMIC and Tencent (small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.67 |
| Communication Services | 9 | -0.56 |
| Consumer Discretionary | 28 | -2.08 |
| Consumer Staples | 13 | -0.39 |
| Energy | 7 | -0.49 |
| Financials | 23 | 0.21 |
| Health Care | 13 | 2.02 |
| Industrials | 20 | -0.12 |
| Information Technology | 10 | 0.84 |
| Materials | 10 | 0.07 |
| Real Estate | 6 | 0 |
| Utilities | 12 | -0.48 |
| Mainland China Listed | 404 | 0.01 |
| Communication Services | 6 | -0.55 |
| Consumer Discretionary | 31 | -0.34 |
| Consumer Staples | 24 | 0.17 |
| Energy | 13 | 0.7 |
| Financials | 64 | 0.71 |
| Health Care | 31 | 0.15 |
| Industrials | 64 | 0.34 |
| Information Technology | 91 | -1.5 |
| Materials | 58 | -0.26 |
| Real Estate | 6 | -0.08 |
| Utilities | 16 | 0.82 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.7 |
| Alibaba HK | 9988 HK Equity | -1.9 |
| JD.com HK | 9618 HK Equity | -6.2 |
| NetEase HK | 9999 HK Equity | 0.4 |
| Yum China HK | 9987 HK Equity | -1 |
| Baozun HK | 9991 HK Equity | 0 |
| Baidu HK | 9888 HK Equity | 0.2 |
| Autohome HK | 2518 HK Equity | 2.2 |
| Bilibili HK | 9626 HK Equity | -0.7 |
| Trip.com HK | 9961 HK Equity | -1.9 |
| EDU HK | 9901 HK Equity | 1.7 |
| Xpeng HK | 9868 HK Equity | -0.6 |
| Weibo HK | 9898 HK Equity | 1.9 |
| Li Auto HK | 2015 HK Equity | -2.3 |
| Nio Auto HK | 9866 HK Equity | 3.7 |
| Zhihu HK | 2390 HK Equity | 0.4 |
| KE HK | 2423 HK Equity | 1 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2 |
| Meituan HK | 3690 HK Equity | -5.2 |
| Hong Kong’s Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| XIAOMI CORP-CLASS B | 6.9 |
| ALIBABA GROUP HOLDING LTD | -1.9 |
| MEITUAN-CLASS B | -5.2 |
| TENCENT HOLDINGS LTD | -0.7 |
| JD.COM INC-CLASS A | -6.2 |
| HORIZON ROBOTICS INC | -4.3 |
| BYD CO LTD-H | 3.9 |
| AKESO INC | 7.6 |
| SEMICONDUCTOR MANUFACTURING | 0.4 |
| XPENG INC – CLASS A SHARES | -0.6 |
| Shanghai and Shenzhen’s Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| BYD CO LTD -A | 4.8 |
| LAKALA PAYMENT CO LTD-A | 8.3 |
| CONTEMPORARY AMPEREX TECHN-A | 1.5 |
| NINGBO SHUANGLIN AUTO PART-A | 1.4 |
| HONGBAOLI GROUP CORP LTD-A | 2.8 |
| HYUNION HOLDING CO LTD-A | 10 |
| EOPTOLINK TECHNOLOGY INC L-A | 12.5 |
| VICTORY GIANT TECHNOLOGY -A | 0 |
| EAST MONEY INFORMATION CO-A | 0.3 |
| QINGDAO KINGKING APPLIED -A | 2.2 |
Past performance is not indicative of future results
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.28 versus 7.28 yesterday
- CNY per EUR 8.29 versus 8.31 yesterday
- Yield on 10-Year Government Bond 1.66% versus 1.66% yesterday
- Yield on 10-Year China Development Bank Bond 1.70% versus 1.70% yesterday
- Copper Price -0.13%
- Steel Price +0.23%
Past performance is not indicative of future results
—
Originally Posted April 24, 2025 – Tariff Talk Roller Coaster Continues
Author Positions as of 4/24/25 are KLIP, KBA, KALL, KCNY, KFYP, KCNY, KEMQ, BZUN, HSBC, KWEB, KHYB, LI US
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