China Stock Investment Advisory
The CoronaVirus and the Shanghai Composite Index Price Forecast Update
February 20 2020
The Shanghai index has bounced back quite nicely since the 8% gap down from Coronavirus fears on February 03 and after the one week long Chinese New Year holiday.
On February 03 the daily weekly accumulation distribution indicators went negative but are now currently positive again, and the monthly indicator is still positive.
Major price support is about 2,600 and near-term price support is about 2,900. Near-term price resistance is now being touched currently with longer-term price resistance at about 3,300.
Caution still needs to be observed currently looking for consolidation, price support, and stablizition. If the 2,600 to 2,900 price support area can hold near-term, we could see higher prices long-term. If you do invest in China stocks, stick with the leaders as they will perform the best in the long-term. One of these leaders is listed below.
Contact us at firstname.lastname@example.org for detailed analysis on leading China stocks to invest and trade.
Chinese Online Education Company Surges Higher
February 20 2020 - This China Stock Jumps On Earnings Beat, Strong Enrollment Growth By Investors Business Daily
Chinese education stock GSX Techedu (GSX) surged Tuesday after besting earnings views in its third quarterly report since its June 2019 IPO.
Earnings per American depositary share shot up to 0.70 yuan in Q4 from 0.06 a year ago, translating to 10 cents per ADS and above Refinitiv views for 8 cents.
Revenue more than quintupled in local currency to 935 million yuan, or $134.3 million, beating Refinitiv views for 845.7 million yuan or $121 million, as total enrollments increased 290% to 1.12 million.
The recent IPO stock sees Q1 revenue of 1.086 billion to 1.106 billion yuan, below consensus for 1.19 billion.
GSX has adopted an online live large-class format to deliver its courses. It believes this is the most effective and scalable model to disseminate high-quality teaching resources to students in China. The firm says Big Data analytics permeate each aspect of its business.
GSX Techedu Stock Powers Higher
Shares closed up 9.7% at 37.86 on the stock market today but are still more than 10% below all-time highs. Rivals New Oriental Education & Technology (EDU) and TAL Education Group (TAL) lost 1.8% and 2%, respectively.
Since hitting a low of 8.53 on June 7, the day after it went public, GSX Techedu stock has seen its value increase by almost 50%. MarketSmith analysis shows the stock has no actionable base, but aggressive investors may choose to buy on its earnings gap-up. It has an Accumulation/Distribution Rating of A-, which reflects strong institutional investment over the past 13 weeks.
GSX Techedu stock is trading well above its 50-day line, which is a bullish indicator. In addition, its relative strength line is moving up again after a recent decline, indicating it has handily been outperforming the S&P 500. GSX Techedu stock has an IBD Composite Rating of 53, an EPS Rating of 84, and a perfect Relative Strength Rating of 99, according to the IBD Stock Checkup tool.
These Factors Boost China Stock
Last year, Morgan Stanley analyst Sheng Zhong said there is a path to a $160 billion market in online after-school tutoring in China. The launch of 5G networks, government initiatives, and a rush to consolidate the market all stand to benefit China stocks in the education sector such as GSX Techedu.
"We estimate that total hours spent on online K-12 tutoring in China will jump from 1.4 billion in 2018 to 22 billion in 2030, with online hours per user per week increasing to five, which is roughly half of the total average hours per week on K-12 tutoring (10 hours, online and offline)," Zhong said in a July 24 research paper.
"This shows our expectation that close to half of academic tutoring will shift to online, while about half of extracurricular tutoring/training, which requires physical attendance (especially sports), will remain offline."
Another reason it could succeed is GSX uses the online merge offline, or OMO, model for providing its courses. That means using a blend of online and offline lecturing or tutoring, so students can start a lesson on your mobile device, then continue the lesson in person.
This is the same model used by U.S. education technology such as Knewton and DreamBox.
Zhong said in last year's research note that that development proprietary databases of and algorithms for learning behavior requires online and offline education.
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