Shareholders Foundation, Inc.

NYSE:FHS Shareholder Notice: Lawsuit Alleges Misleading Statements by First High-School Education Group Co., Ltd.

A lawsuit was filed on behalf of investors in First High-School Education Group Co., Ltd. (NYSE:FHS) shares over alleged securities laws violations.


San Diego, CA -- (SBWIRE) -- 05/27/2022 -- An investor, who purchased NYSE: FHS shares, filed a lawsuit against First High-School Education Group Co., Ltd in the U.S. over alleged violations of Securities in connection with First High-School Education's March 2021 initial public offering (IPO).

If you purchased shares of First High-School Education Group Co., Ltd. (NYSE: FHS), you have certain options and for certain investors are short and strict deadlines running. Deadline: July 11, 2022. NYSE: FHS investors should contact the Shareholders Foundation at or call +1(858) 779 - 1554.

China based First High-School Education Group Co., Ltd. operates private high schools in Western China. On or around March 11, 2021, First High-School Education Group Co., Ltd. conducted its initial public offering, issuing 7.5 million American depository shares ("ADSs") priced at $10.00 per ADS.

In the week immediately prior to the 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 involving the economy, military, trade, diplomacy, education, the environment, and other issues. Unbeknownst to investors until after the IPO, Chinese government leaders in attendance at the Two Sessions meetings had proposed – and ultimately adopted – stringent regulations governing the educational industry with material adverse repercussions for First High-School Education's business, operations, and financial prospects.

Soon after the IPO, media reports stated that attendees of the Two Sessions conference had proposed stricter regulations to rein in the for-profit education industry, such as regulations aimed at enhancing teacher quality, limiting fee scams, reducing market abuse, and reducing the stress that for-profit educational companies had placed on students in the Chinese educational system.

On May 12, 2021, news reports revealed that the impending government crackdown on for-profit educational companies in China would be much more drastic and far reaching than previously publicly known. Sources stated that anticipated rules would include measures such as banning on-campus tutoring classes, prohibiting tutoring services during weekend hours, and the imposition of industry-wide fee limitations.

Then, on May 14, 2021, China's state council announced rules that it would further tighten regulations on compulsory education and training institutions. According to an article on titled "Legal Changes in Private Education in China: Rising Risks for K-12 Education Companies; Higher-Education Providers Benefit," the new rules "aim to prohibit profit-making in compulsory education," and "expose K-12 school operators to heightened regulatory risks and their revenue growth may slow . . . until they obtain more clarity on how the changes will be implemented." Thereafter, on July 23, 2021, China unveiled a sweeping overhaul of its education sector, banning companies that teach the school curriculum from making profits, raising capital, or going public. These drastic measures effectively ended any potential growth in the for-profit tutoring sector in China.

Then, on September 28, 2021, First High-School Education Group Co., Ltd. announced its first half of 2021 unaudited financial results, including, among other results, gross profit of RMB62.3 million (US$9.6 million), a decrease of 3.6% from RMB64.6 million in the first half of 2020; a net loss of RMB3.8 million (US$0.6 million), compared to a net income of RMB31.9 million in the first half of 2020, which was "primarily incurred by certain non-recurring expenses"; and adjusted net income (Non-GAAP) of RMB11.2 million (US$1.7 million), a decrease of 64.9% from RMB31.9 million in the first half of 2020.

On April 5, 2022, First High-School Education Group Co., Ltd. announced that it had received a letter from the New York Stock Exchange ("NYSE") stating that it was in non-compliance with the NYSE's listing requirements because its total market capitalization and stockholders' equity had fallen below compliance standards. The following week, on April 13, 2022, First High-School Education announced that its total revenues for 2021 were just RMB400.2 million, representing a substantial deceleration in the second half of the year. The release also stated that First High-School Education's total student enrollment had remained almost unchanged at 21,247 students at year's end, representing a paltry 3% increase year-over-year, and that First High-School Education's gross profit had declined 18.1% during the year.

Finally, on May 3, 2022, First High-School Education Group Co., Ltd. filed a notice with the U.S. Securities and Exchange Commission that it would not be able to timely file its annual report on Form NT 20-F.

Shares of First High-School Education Group Co., Ltd. (NYSE: FHS) declined to as low as $0.813 per share on May 06, 2022.

The plaintiff claims that the IPO's Registration Statement made inaccurate statements of material fact because defendants failed to disclose the following adverse facts that existed at the time of the IPO that the new rules, regulations, and policies to be implemented by the Chinese government following the Two Sessions parliamentary meetings were far more severe than represented to investors and posed a material adverse threat to First High-School Education and its business, 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 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 First High-School Education at the time of the IPO, and were materially false and misleading and lacked a factual basis.

Those who purchased shares of First High-School Education Group Co., Ltd. (NYSE: FHS) have certain options and should contact the Shareholders Foundation.

Shareholders Foundation, Inc.
Michael Daniels
3111 Camino Del Rio North - Suite 423
92108 San Diego
Phone: +1-(858)-779-1554
Fax: +1-(858)-605-5739

About The Shareholders Foundation
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, , which does research related to shareholder issues and informs investors of securities class actions, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigation, and/or settlements are not filed/reached and/or related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.