Modern Pioneer in Private Education
According to a report by Synovate, during the 2009-2010 academic year a market value of HK$19.84 billion was recorded in the secondary school tutorial market and it is expected that during the 2014-2015 academic year such market value could reach HK$21.77 billion. In the academic year 2009-2010, almost 80% of about 370,000 students, had registered for tutorial courses, with an average expenditure of HK$5410 by each student; this is something worth catching more attention. MODERN EDU (01082) chairman and executive director Ken Ng said, during an interview with our reporters, a new around of tutorial wave is approaching on the establishment of “334 education system”; no wonder there is immense popularity in related local market.
Ng frankly expressed that the group focuses on two target markets: first the prospective 14,500 local university students, with a view to assisting them getting as many grade A as possible; second is those students with less capabilities and the goal is as simple as helping them to get into university. Last year there was a total of 923 secondary tutorial centers in Hong Kong, representing compound growth rate is around 6.2% YoY; chain tutorial centers accounted for 34%. So what is it so superb about MODERN EDU? He pointed out that the group is the only listed local tutorial center, obtaining branding effects to a certain extent; not only there are more subjects offered by the group than its competitors, they pioneered in adopting multimedia classrooms and the use of iPad during lessons. He also revealed that probably due to lack of resources and talents, most of the group’s competitors are unable to open courses on Geography and Liberal Studies; he deeply believed that at this stage the group is the only one who could open Liberal Studies courses.
The group uses different brands such as “Modern Education”, “Modern College”, “Modern Bachelor Education” and “New Era Bachelor Education Centre” to provide private education services. The group became listed this year, enlisting capital amounting to nearly HK$100 mln with an initial public offering price of HK$1.3. HK$50 mln would be used as clearing debts while the remaining capital would be used for business development, including using HK$34 mln for mergers and acquisitions, HK$15 mln to set up five education centers on outlying islands and in New Territories and HK$6 mln to explore the realm of education consultancy services. Being the person to uncover star tutorial teachers, Ng sets a personal target of making every single tutorial center under his rule to get a certain amount of profits; he would not engage in price-cut competition or frequently provide customers with preferential offers, with a view to turning education services into a real industry.
Ng revealed that in choosing the locations of branches, computer is used to calculate the districts to which day-time students belong; in the future there will be new branches in Tung Chung and Sai Kung, which are two districts yet to be explored. Primary tutorial centers are relatively easier to be set up; the key to choice of location lies in those small communities where there are more than 10 buildings. The local market would be the base of the business while there are huge potential for Mainland education market, where the group would focus on English training courses. Comparing to Hong Kong, there is a serious lack of English teaching talents in the Mainland, leading directly to the group’s establishment of English training centers in 15 Mainland cities.
At the moment there are 11 educational groups listed in Mainland, with New Oriental Education & Technology Group, which is listed in U.S., being the largest of these. New Oriental had an initial public offering price of US$15 in 2006 and its stock prices had risen by four times after three years. Ng stated that in Mainland, independent or family-base tutorial centers are usually bought by big groups, therefore becoming a member within the whole chain of Mainland education industry. He emphasized that Hong Kong people possessed advantage in English to a certain extent and Hong Kong is expected to become an education hub facing Mainland China. Besides such advantage, all the subjects adopting English papers such as Accounting and Geography would give the group an ocean of business opportunities. He added that in recent years the demand for Bridging Programme which connects matriculation education with overseas bachelor programmes as well as toddlers’ English courses is quite large; the group is going to set up five English learning centers for toddlers in Mainland, which will become one of the major sources of revenue.