Dear Fellow Investor,

Earnings season is once again upon us! If you've been with Inside China Dispatch for a while now, you know that earnings are huge for our stocks because they provide positive momentum and, usually, significant gains.

One of our stocks is reporting earnings on Monday, and I believe this could be a monster quarter for the company. Today I want to talk about how this unique business got started and why its earnings next week are expected to be big.

From Humble Beginnings to Industry Domination

This company was founded in 1993 by Michael Yu, a graduate of Peking University. If Tsinghua University is known as the MIT of China, then Peking University is China's Harvard. After graduating from the Harvard of China, Yu went on to teach English at his alma mater from 1985–1991 and made $12 a month, which was considered a good salary at the time!

But Yu wanted more. Despite his wife calling him a "loser" for leaving his post at such a prestigious university, Yu decided to move to the U.S. His student visa application was rejected, however, so he was forced to come up with an alternate plan. Yu made the most of the situation and started a test preparation school to help other Chinese students gain admission into U.S. graduate schools. Today Michael Yu is the wealthiest teacher in China's history.

From its first class of only 30 students, the company has grown over the past 14 years to become China's largest private education service provider in terms of program offerings, enrollment and geographic presence. It has a network of 35 schools and 130 learning centers in 33 cities, as well as an online network with 3 million registered users.

Earnings Provide Strong Growth

Last quarter our China Strategy play on energy increased profits by 30%. And our insurance company's net profit more than doubled last year. So what's driving these exciting results? China's unstoppable growth. The stock market in China is reflecting the country's economic boom, and as you know, it has made an amazing recovery over the past year. I get asked all the time about how we can profit from China's red-hot stock exchanges. If you join China Strategy today, I'll give you immediate access to my website and the names of 23 companies that are delivering solid earnings and that should be a part of your China portfolio.

The company has helped hundreds of thousands of Chinese students gain admission to U.S. universities by providing prep courses on the TOEFL (which measures English proficiency) and GRE standardized tests, which are required by U.S. universities and graduate programs.

This is a huge and growing market. During the past decade, China sent more students abroad than any other nation, and Chinese students now make up 14% of all foreign students worldwide. And remember, every single one of them must pass the TOEFL test, so you see how popular and essential these preparatory classes are. Interested in learning more about this test prep giant? Click here to get all of the details.

Most graduate students in the U.S. from Beijing and other major Chinese cities are familiar with Yu and his school. In fact, Fei, my research assistant who has a Ph.D. in biochemistry from UCLA, once attended this company's classes in Beijing to prepare for his standardized tests.

A Vast and Eager Market

Getting into America's top graduate programs is not the only reason Chinese students take classes with this company. Although there are many Chinese college graduates seeking jobs, most of them are not properly trained by China's outdated university system to thrive in a fiercely competitive business world. The company's courses help them become more attractive career candidates.

As China becomes a major player in the global economy, demand for English-speaking workers is rising dramatically. Many multinational firms operating in China, from Motorola to GM, have complained about the lack of qualified local managerial talent. They rank poor English skills as their number-one problem, so recent graduates are attending our company's classes to improve their English and technical skills to get promoted or find a higher-paying job. According to a recent survey conducted in Shanghai, over 15% of graduates are willing to spend upwards of 10% of their monthly disposable income on training courses.

In addition, the Chinese government recently made English language education mandatory for all high school graduates, so you can see what a good position this company is in. I believe this company will become an educational vanguard to the next generation of Chinese workers by helping them with the training they need to participate in the global economy.

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Buy Now for Top-of-the-Class Profits

Our education company went public on the New York Stock Exchange in September of last year and has delivered stellar profits for China Strategy members—183% to be exact.

Think that it's too late to get in on the action? According to my research, you're just in time!  This company is finishing up an aggressive expansion phase, building numerous schools in fast-growing second-tier cities throughout China. Its capital expenditures temporarily cut into profit margins last quarter. But those expenditures are now expected to boost revenues in the current quarter.

That's why it's crucial that you buy this stock before its earnings are reported on Monday, October 15. Shares could pop after the company announces a strong quarter. If you wait until after the report, you might miss out on quick and easy gains. Click here to get my specific buy advice on this fast-growing educational services leader.

Also, the June to August quarter is usually the strongest time of year for our company because Chinese students have a two-month summer holiday—giving them time to attend summer test prep courses.
Now is the time to buy this education company, and investors who wait until after the earnings report will be sorry that they let the next wave of profits slip through their fingers.

Sincerely,

Robert Hsu
Editor, China Strategy

P.S. This education company isn't the only holding in our China Strategy portfolio that's set to announce strong quarterly results. We own two other companies that report in the coming 14 days and could add rocket-like profits to your portfolio. Get the names of all three companies when you join China Strategy today.