(Yicai Global) Feb. 23 -- Shares of New Oriental Education and Technology Group gained despite the Chinese private tutoring giant reporting a six-month net loss of USD876 million from winding up its business teaching school-age students following China’s crackdown on the sector.

New Oriental [HKG: 9901] ended 5.4 percent higher at HKD11.84 (USD1.52), after surging as much as 7.4 percent earlier today. Its New York-listed shares [NYSE: EDU] were up 1.3 percent at USD1.52 in after-hours trading following a 1.3 percent decline yesterday.

The net loss for the six months ended Nov. 30 compared with a net profit of USD228.6 million a year earlier, according to the Beijing-based company’s earnings report released yesterday. Revenue rose 5 percent to USD2 billion.

New Oriental met with considerable costs and expenses in terminating leases on premises and laying off staff after it stopped teaching academic subjects to students from kindergarten to grade nine, or K-9, though administrative expenses and cost of revenue fell after the firm withdrew from the K-9 business.

Chairman Yu Minhong said last month that it had let go 60,000 employees and lost nearly CNY20 billion (USD3.1 billion) because of the redundancies, tuition fee refunds, and pulling out of property leases early.

New Oriental announced in November that it would exit the K-9 education business by the end of 2021 in the wake of a regulatory crackdown on China’s private education sector. Income from the business had accounted for about 60 percent of its revenue.

The Chinese authorities brought out new regulations last July targeting private tutors and online educators that provided academic classes to school-age students to lessen the study load during compulsory education years. That has decimated the stock prices of Chinese education technology companies and led to red ink.

New Oriental’s shares traded in Hong Kong and New York have lost more than 90 percent of their value over the past 12 months.

New Oriental has now shifted focus to other educational products and services such as test preparation courses, adult language learning, and educational materials, it said. The firm also launched a live e-commerce sales platform in December and has sold goods worth about CNY4.5 million (USD711,100) since then.

Editor: Futura Costaglione