First High-School Education Group Co., Ltd.

Investigation
04/13/2022

Initial Lawsuit
05/11/2022

Lawsuit Progression
07/11/2022

Investigation

Public Offering Date
March 11, 2021
Proposed Claim
Securities Violation

This investigation follows the large company’s stock price decline since the initial public offering (IPO). So why the decline? As always, numerous factors impacted the stock since the IPO, but this investors investigation focuses on the following.

As early as one week prior to the completion of the company’s IPO, from March 4, 2021 through March 11, 2021, China held its annual “Two Sessions” parliamentary meetings, where the two main political bodies of China meet, discuss, and reveal plans for China’s policies, including education. The following week, First High-School Education Group conducted its IPO. As of May 16, 2022, the stock price has dropped more than 90%, from the initial $10 IPO price per share.

Main Event

Q2 2021 Impacted

09/28/2021

SEC Filing

The company issues a press release announcing its financial results for the first half of 2021 ended June 30, 2021, disclosing revenue of RMB231.9 million, a year-over-year increase of only 24.8%, compared to 30.5% year-over-year revenue increase for first nine months of 2020, and 32.5% year-over-year revenue increase for the full year 2020. The company explained that rules impacting its business “have set series of restrictions and guidelines on operation, taxation, shareholding structure, connected transactions and merge and acquisition of compulsory education.”

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$3	$3.89	$-0.89	-22.88%

See more on Factual Timeline

Initial Lawsuit

First Complaint - 05/11/2022

This is a securities class action on behalf of all persons or entities who purchased First High-School Education Group Co., Ltd. American depositary shares (ADSs) in or traceable to the company’s March 2021 initial public offering (IPO).

Filing Date
05/11/2022
Public Offering Date
03/11/2021
Transgression
Securities Violation
Filing Firms
Abraham Fruchter & Twersky LLP
Robbins Geller Rudman & Dowd LLP
Case Title
Dagan Investments LLC v. First High-School Education Group Co., Ltd. et al
Docket Number
1:22-cv-03831
Court
New York Southern District Court
Free File
Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:

(a) that the new rules, regulations and policies to be implemented by the Chinese government following its annual “Two Sessions” parliamentary meetings were far more severe than represented to investors and posed a material adverse threat to the company and its business;
(b) that contemplated Chinese regulations and rules regarding private education were leading to a slowdown of government approval to open new educational facilities which would have a negative effect on First High-School Education’s enrollment and growth; and
(c) that, as a result, the registration statement’s representations regarding First High-School Education’s historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, and financial results and trajectory of the company at the time of the IPO, and were materially false and misleading and lacked a factual basis.