麦格里集团-中国教育产业-china education the rise of for-profit edu mega-brands-20170630-macquarie

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1、CHINAChinaEducationTheriseoffor-profitedumega-brandsThelargesteducationcompaniesintheworldWebelievethattobuyTALandEDUtodayistoassumethatthesecompanies–alreadythelargestlistedfor-profiteducationcompaniesintheworldintermsofmarketcap–havemuchfarthertogo.Wethink

2、thatwithlow-single-digitrevenuemarketshareofanexpandingmarket,educationbrandleadershaveadecadeofacceleratedgrowthaheadofthem.Inthisreport,wesegmentouttheInsidethreemainsub-sectors–K-12tutoring,PrivateschooloperatorsandProfessionaleducation–andparsetheinvestm

3、entcases.WethinkK-12tutoringPeckingorder:K-12tutors>Professionalisahighgrowthsegmenttoholdoverthenextfiveyears.Thekeydriversareeducation>Privateschools2rapidlyevolvingeducationaltechnology,risingurbanincomesandgrowingpowerofbrandsamongChina’sever-anxiousTige

4、rParents.ButprivateschoolsValuation–DCFforsustainableandnowtradeatadiscountwebelieveduepartiallytouncertaintyandforeseeablegrowth7misunderstandingonregulation.MQtoppick–K-12after-schooltutoring10China’seducationmarketisenteringthegoldenage,drivenbytheAmendme

5、ntProEducationtoembraceonline20ofPrivateEducationPromotionLaw(effectiveSep-2017),therelaxationofthePrivateSchoolstogrowsteadily26one-childpolicy(tohitK-12after2020),andtherapidemergenceofonlineeducationtechnologies.Alongwiththisreport,weinitiatecoverageofTAL

6、withAregulatededucationindustry33anOutperformratingattargetpriceUS$165,36%upside.EDUisourothertopAppendix–Globalcomp36pick.Webelievetheupcomingresultsandtheroll-outofthedual/double-teachermodelshouldbethecatalysttoconvincethemarketthatpenetrationintolowerCom

7、paniesundercoveragetiercitiesisfeasible.CompanyTickerRatePriceTP%K-12tutoringservices–theunbrandedsegmentbeckonsTALEdu.TALUSOPUS$121.64US$16536%EDU.EDUUSOPUS$71.60US$8823%Withover80%ofChineseparentsrespondingtoasurveythatitisessentialtoMingsheng1569HKOPHK$1.

8、32HK$1.7936%enroltheirchildreninafter-schooltutoring,thearmsracetoacetheZhongkaoVirscend1565HKNHK$5.15HK$4.80-7%Source:Bloomberg,MacquarieResearch,27-June2017(SeniorHighSchoolEntranceExamination