ATA Inc. (NASDAQ: ATAI), through its subsidiaries, provides computer-based testing services in the People’s Republic of China. The company offers services for the creation and delivery of computer-based tests utilizing its test delivery platform and proprietary testing technologies that are used for professional licensure and certification tests in various industries, including IT services, banking, teaching, and insurance; and administrative services, such as test registration, scheduling, fee collection, and certification fulfillment.
ATAI shares have risen sharply on the news of the sale of their Testing Services business, that raised a significant amount of cash. Before the sale announcement, ATAI shares closed at $.72 on August 23rd and are currently trading at $2.45 per share.
Recent Events
August 24, 2018. ATA provided an update on its long-term strategy following the completion of the sale of its testing services business. With the Transaction completed, ATA no longer conducts its testing development and delivery business and expects to have approximately US$23.0 million to US$26.0 million in cash from proceeds received from the Transaction. The Company intends to use this capital to explore potential merger and acquisition targets in the education sector. https://finance.yahoo.com/news/ata-outlines-corporate-strategy-following-200500595.html
August 16, 2018. ATA announced that the Company has entered into a definitive agreement for the acquisition of Beijing Biztour International Travel Service Co., Ltd., a provider of international educational study tour and travel services for students in China who are interested in overseas study tours primarily in the U.S., United Kingdom, and Australia. https://finance.yahoo.com/news/ata-announces-entry-definitive-agreement-200600817.html
Recent Operating Highlights
- Announces completion of the third and final closing of the ATA Online transaction (the “Transaction”)
- ATA’s Board of Directors declared a special cash dividend of US$3.00 per common share, or US$6.00 per ADS, in connection with the Transaction.
- Announces entry into definitive agreement for the acquisition of Beijing Biztour International Travel Service Co., Ltd. (“Beijing Biztour”), a provider of international educational study tour and travel services for students in China who are interested in overseas study tours primarily in the U.S., United Kingdom, and Australia.
The Company’s remaining businesses include:
- K-12 education assessment tools and content;
- The Nanjing University Project Shuang Chuang;
- The Research Project with the Education and Research Institute of Tsinghua University;
- Minority strategic investments in certain education technology companies, including Beijing Empower Education Online, Co., Ltd., ApplySquare Education & Technology Co., Ltd., Beijing GlobalWisdom Information Technology Co., Ltd., Brilent, Inc., Beijing Satech Internet Educational Technology Ltd. and Master Mind Education Company.
About
ATA Inc., through its subsidiaries, provides computer-based testing services in the People’s Republic of China. The company offers services for the creation and delivery of computer-based tests utilizing its test delivery platform and proprietary testing technologies that are used for professional licensure and certification tests in various industries, including IT services, banking, teaching, and insurance; and administrative services, such as test registration, scheduling, fee collection, and certification fulfillment. Its e-testing platform integrates various aspects of the test delivery process for computer-based tests, from test form compilation to test scoring and results analysis. The company also offers mobile test administration platform MTS for test administration; and EzTest, an online self-service testing platform that provides testing management and delivery functions for the test delivery organizations and individuals, including item banking, test form composition, test delivery, online proctoring, and test result analysis. In addition, it provides EzInterview, an online interview management platform to support the talent assessment and hiring process; and HR Select, an employee assessment solution that enables corporate human resources departments to test, benchmark, and analyze job applicants; and online education services. As of December 31, 2017, the company operated 3,344 authorized test centers. It serves professional associations, governmental agencies, and IT vendors, as well as individual online education services consumers. ATA Inc. was founded in 1999 and is headquartered in Beijing, the People’s Republic of China.
Financial review
2018 Second Quarter
ATA’s total net revenues for the three months ended June 30, 2018, were RMB77,076 (US$11,648), compared to RMB1.2 million in the prior-year period. This decrease was primarily due to the reclassification of approximately RMB1.5 million in rental income from net revenues to other operating income, net, as a result of the adoption of new revenue guidance ASC 606, effective January 1, 2018. Related costs of approximately RMB0.6 million were also reclassified from cost of revenues to other operating income, net.
Net loss from continuing operations, net of income taxes, for the three months ended June 30, 2018, was RMB20.2 million (US$3.1 million), compared to net loss of RMB17.4 million in the prior-year period, primarily due to approximately RMB3.4 million in increased general and administrative expenses, which was caused by an additional RMB8.0 million contribution to the Research Institute of Future Education and Assessment at Tsinghua University (“THU”) (a similar RMB9.0 million contribution made during the quarter ended June 30, 2017, was recorded under discontinued operations), partially offset by a decrease in professional fee expenses related to the Company’s change in fiscal year-end from March 31 to December 31.
Net loss from discontinued operations, net of income taxes, for the three months ended June 30, 2018, was RMB79.5 million (US$12.0 million), compared to net income of RMB8.6 million in the prior-year period, primarily due to RMB110.8 million in income taxes accrued for the Transaction, which was offset by approximately RMB28.6 million in net income generated from ATA Online operations during the 2018 second quarter.
Stock influences and risk factors
Revenues and expenditures are denominated in Renminbi, fluctuations in the exchange rate between the U.S. dollar and Renminbi will affect the balance sheet and earnings per share in U.S. dollars.
They may fail to satisfy the continued listing requirements for Nasdaq Global Market following the sale of ATA Online.
If they fail to maintain relationships with major test sponsors, revenue growth may slow, or they may experience a decrease in revenues.
Stock chart
On Wednesday, August 29, 2018, ATAI shares were at $2.45 on traded volume of 2.1 million shares. The current RSI (14) is 89.50
At $2.45, ATAI shares are trading above their 50 DMA and 200 DMA of $.66 and $.60 respectively.
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