TAL's expansion highlights nation's shifting demographics

New Oriental Education & Technology Group Inc's market value 18 months ago was about five times that of its peer, TAL Education Group. Now the two are almost even.

The turnaround is as much an indicator of the different strategies pursued by the two Beijing for-profit tutoring companies as it is about China's shifting demographics. New Oriental got about 85 percent of its revenue from language training and test preparations in fiscal 2014. At TAL, most sales are derived from after-school science-focused courses geared for kindergarten-through-12th grade, or K-12, students.

"The fastest-growing segment is the K-12 segment," says Alistair Way, the emerging-markets investment director in Edinburgh at Standard Life Investments Ltd, which manages about $422 billion. "That's why TAL Education is on such a high valuation multiple compared with New Oriental, because it is purely focused on this segment. There are a large number of Chinese students going abroad to study, so there isn't much growth" from the other market, he says.