$New Oriental EDU & Tech(EDU.US) $TAL Edu(TAL.US) $Gaotu Techedu(GOTU.US) Recently, Dolphin Research noticed that education stocks have collectively weakened, standing out conspicuously while other Chinese concept stocks were performing well. The main reason for the stock price pressure stems from the Ministry of Education's announcement on May 14th regarding a standardized campaign for basic education. Additionally, the approval rate for quality education licenses in April slightly accelerated compared to the previous month (+1.3%). Regulation is the primary factor, while the faster license approvals have only marginally alleviated the current supply-demand imbalance.

From the 12 negative items listed by the Ministry of Education, most are not directly related to compulsory education but focus more on subject-based education. For example, it strictly prohibits evaluating schools based on enrollment rates or exam rankings, inducing parents to purchase supplementary materials beyond the required scope, or conducting competitive selection during the compulsory education stage.

Regulation remains the primary risk for education stocks. From a market demand perspective, parents' enthusiasm for enrolling their children in classes has not waned after the Lunar New Year, and the demand still outweighs supply. Although this standardized campaign is not fundamentally linked to quality education, the shadow of regulatory actions three years ago may have prompted some investors to temporarily reduce their positions. Recent news reports have also highlighted regulatory scrutiny on education and training institutions. However, Dolphin Research believes that since the overarching regulatory direction remains stability-focused, and the current appeal of education stocks lies in quality education rather than subject-based training, investors should actively monitor opportunities in high-quality education stocks during this pullback. For instance, New Oriental, which we closely cover, has a reasonable valuation of $15 billion. It's worth watching whether this correction will create an attractive entry point.