RYB's revenue up, but shares still falling

Shares of RYB Education, Inc, the China-based company enmeshed in allegations of child abuse at one of its kindergartens in Beijing, fell almost 13 percent on Thursday as the company reported third-quarter revenue rose almost 40 percent over the same period last year.

RYB's American depositary shares declined by $2.63, or 12.94 percent, to close at $17.70 on the New York Stock Exchange.

RYB - which stands for Red, Yellow and Blue - said third-quarter revenue was $37.4 million, compared with $26.9 million for the third quarter of 2016. The company did not give a revenue comparison to the second quarter. For the first nine months of 2017, RYB said revenue was $101.7 million, compared with $76.1 million for the first nine months of 2016.

Shares had dropped on Wednesday after the company disclosed that there were parent complaints about other RYB-branded kindergartens, and class-action lawsuits were announced in the US against the company. The lawsuits seek to recover damages for alleged violations of US securities laws.

One of the law firms filing a class action suit is New York-based Liu, Zheng, Chen and Hoffman.

Louis Lu, a partner in the firm, told China Daily, "We just want to let the court here to do its part, to decide whether the company has been following US law. If the company broke securities law, it should be held liable.'

"We just want to protect shareholder interests," he added.

He said he could not disclose how many people have signed onto the firm's class action suit.

On Tuesday, Chinese police said they had detained a teacher suspected of using knitting needles to discipline children in the Beijing kindergarten, though they added that some other claims of child abuse were unfounded.

The allegations and a police investigation announced on Nov 23 created an online furor in China, generating more than 76 million mentions of "RYB" on Tencent Holdings Ltd's WeChat messaging service.

RYB's shares lost nearly 40 percent the next day before recovering some losses earlier this week. The plunge almost wiped out most of the 44 percent rise in the company's stock since its initial public offering in September.

In its earnings report, the company said that as of Sept 30, 2017, the number of students enrolled at RYB directly operated kindergartens was 21,413 and the number of franchise play-and-learn centers and kindergartens in operation were 910 and 209, respectively.

It did not provide numbers of enrolled students or franchise operations for the second quarter.

paulwelitzkin@chinadailyusa.com