Shares of Chinese tutoring company TAL Education Group were trading nearly 50 percent above their IPO price in their stock market debut Wednesday as investors bet on growth and strong financials.
The shares opened at $14 and rose to $15.74 on the New York Stock Exchange before easing to $14.77.
The company Tuesday sold 12 million American Depositary Shares for $10 each, raising about $120 million. It had planned to sell shares for $8 to $10 each.
TAL Education sells afterschool kindergarten through grade 12 tutoring in subjects including mathematics, English, Chinese, physics, chemistry and biology.
Chinese companies have been good to investors in a bleak U.S. IPO market. Three of the five top-performing offerings of the past 12 months are Chinese, according to Connecticut-based IPO research house Renaissance Capital.
TAL Education's net revenue grew 61 percent from a year earlier to $53 million in the six months that ended on Aug. 31. Net income attributable to common shareholders grew 41 percent to $13.2 million in the same period.
TAL served 382,505 students in the fiscal year ended Feb. 28. The company had a 0.26 percent market share in China and 4.5 percent market share in Beijing in 2009. It said that the after-school tutoring market is highly fragmented.
"It's a fragmented market so even with a 4.5 percent share in Beijing we are the leading player," Chief Financial Officer Joseph Kauffman said in an interview.
"It's a huge market. K-12 tutoring in 2010 was about a $34 billion market and we expect it to be a $66 billion market by 2014," Kauffman said.
Kauffman added that the company expects to raise its market share to 10 percent to 12 percent, but declined to say when this might happen.
He said the company plans to add more learning centers in the cities where it already has a presence — Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin and Wuhan.
"They have shown an ability to expand their market share in metropolitan areas and I think they can replicate that," said Francis Gaskins, president of IPOdesktop.com.
Credit Suisse and Morgan Stanley led the underwriters on the IPO. The shares are trading on the New York Stock Exchange under the symbol "XRS."
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