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TAL Education Group ADR TAL Stock Quote

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Morningstar‘s Stock Analysis TAL

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We Raise TAL Education's FVE to USD 5.60 After a Fresh Look

Analyst Note

| Cheng Wang, CFA, FRM, CAIA |

We raise our fair value estimate to USD 5.60 from USD 3.06 after a fresh look at TAL Education, or TAL. We think there is better visibility now after its first quarter of results without the contribution from the K-9 academic afterschool tutoring business. No doubt that revenue will plunge in 2023, but we expect it to rebound to 38% of the 2022 level by 2027 as the new businesses grow. We forecast TAL to turn profitable in 2025 as operating expense ratio improves. Our fair value estimate translates to USD 3.6 billion equity value, about 4% higher than the net cash and investment position. The current share price is 18% lower than our fair value estimate, but we prefer a higher margin of safety given business uncertainty is very high.

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Key Statistics TAL

Company Profile TAL

Business Description

TAL Education Group is a smart learning solutions provider in China. K-9 academic afterschool tutoring used to account for the majority of TAL's revenue before the regulatory changes in 2021 that imposed a nonprofit requirement on the business. After spinning off its K-9 academic afterschool tutoring business, TAL realigned its focus toward enrichment learning, learning technology solutions, and content solutions.

Xiaoying West Street, 5th Floor, Tower B, Heying Center
Beijing, 100085, China, People's Republic of
T +86 1052926658
Industry Education & Training Services
Most Recent Earnings May 31, 2022
Fiscal Year End Feb 28, 2023
Employees 16,200

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