| 作者： | Tommy WONG,Crystal LI |
| 时间： | 2020年08月22日 |
| 重要性： | 一般报告 |
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| 阅读权限： | 该文章钻石卡、金卡、银卡客户可阅读全文 |
| 摘要： | Report title:Koolearn (1797 HK) - K-12 punching above its weight Analyst:Tommy WONG,Crystal LI Report type:Company Date:20200822 [Summary] ■ Koolearn’s FY20 revenue reached RMB1.1bn (+18% yoy), in-line. Non-IFRS net loss of RMB658mn, as indicated by profit warning ■ K-12 paid enrollment was 1.86mn driven by twin engines of DFUB and large classes, but marketing spend likely to remain heavy ■ NEUTRAL: High valuation, high growth, murky earnings outlook FY20 results: revenue inline while margins deteriorated Koolearn’s FY20 revenue at RMB1.1bn, +18% yoy and in-line with Bloomberg consensus. Segments: K-12 revenue +85% yoy, College +1.6% yoy, Pre-K declined by -10% yoy, and institutional customer + 20% yoy. GPM narrowed by 9.5ppt as K-12’s revenue mix increased from 17% in FY19 to 27% in FY20, with lower margin vs. other segments. K-12 reported a gross loss of RMB45mn with -15% GPM in FY20, mainly due to K-12 large classes’ charitable free spring classes during the COVID-19 lock-down period. Non-IFRS OPM was -70%, from significant increase in selling expenses, in which c.50% is direct advertising spend. Twin engines from DFUB and K-12 large class K-12 FY20 paid enrollment reached 1.86mn (+224% yoy), in which DFUB reached 0.66mn (+184% yoy) and large class reached 1.2mn (+269% yoy). As of May 31, 2020, DFUB has entered 172 cities of 24 provinces. Mgmt. indicated the average annual revenue of DFUB’s first batch of 8 cities has reached RMB5mn with 29% GPM after 3-year operation, overall lifting DFUB’s GPM to 24% vs. single digit one year ago. As expansion continues, Koolearn has recruited 2,000+ tutors during last few months and has built 3 more tutor training centers to support teaching and services quality. Likewise, Koolearn will continue to invest in self-developed internet technology/teaching content. Mgmt. expects a higher absolute number of marketing expenses in FY21E given intense competition but with a sharp focus on ROI. Koolearn did not raise class price for K-12 normal priced classes. NEUTRAL on valuation, murky earnings outlook Koolearn's valuation is trading at a premium to peers. It currently trades at 16x FY21E P/S, vs. peers’ average of 6x and its historical average of 13x. We forecast Koolearn’s net losses to be at a peak in FY20 and to narrow gradually, possibly near breakeven by FY22E. However, given the intense competition, it is challenging to estimate the intensity of their marketing spending on customer acquisitions. We revised down our revenue forecast in FY21/22E by 20%/22%. Our TP rolled to HKD34 from HKD33 based on next-12-mo 15x forward P/S (unchanged). |
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