[Click eStock] "Megastudy Education, Online Private Education Market Unaffected by COVID-19"

[Asia Economy Reporter Eunmo Koo] Shinhan Financial Investment forecasted that despite concerns over an economic downturn due to the spread of the novel coronavirus infection (COVID-19), the online private education market will continue to grow.

According to Shinhan Financial Investment, Megastudy Education's sales in the fourth quarter of last year reached 99 billion KRW, a 32.9% increase compared to the same period the previous year, and operating profit rose by 23.6% to 1.3 billion KRW. Researcher Changmin Yoon of Shinhan Financial Investment stated in a report on the 19th, “Although marketing expenses for the elementary and middle school divisions ‘Elly High’ and ‘Mbest’ were invested, resulting in sales exceeding market expectations, operating profit slightly fell short. However, since this is an investment in the elementary and middle school divisions with high sales growth rates, it is positive.” High school division sales increased by 30.7% year-on-year to 64.1 billion KRW, elementary and middle school division sales rose 45.7% to 16.6 billion KRW, and the general adult division also grew 33.1% to 18.2 billion KRW. All divisions grew by more than 30%.

Despite the ongoing impact of COVID-19, it is expected that high growth will be possible both this year and next year. Shinhan Financial Investment estimated Megastudy Education’s sales for this year to grow 16.1% year-on-year to 507.8 billion KRW, and operating profit to increase 36.6% to 81.4 billion KRW. Researcher Yoon explained, “Despite the COVID-19 pandemic, the online sector continues to grow, and cumulative Megapass payment amounts from November last year to February this year have shown a growth rate of over 15% compared to the previous year.” Additionally, the expansion of the regular admission ratio and changes in the EBS linkage rate were cited as positive factors, with high school online division payment amounts growing rapidly not only for third-year high school students and repeaters but also for first- and second-year high school students.

He added, “Although offline academies delayed their opening by one week due to COVID-19, attendance rates currently exceed 90%, and expansions of existing academy sizes and additional dormitory academy constructions are ongoing.” He explained, “Yangji Dormitory Academy is increasing its capacity from 1,000 to 1,500 students, and Russell Dormitory Academy is also under new construction, ensuring additional sales growth in 2021 and 2022.”

The investment opinion and target stock price were maintained at ‘Buy’ and 60,000 KRW, respectively. Researcher Yoon evaluated, “The expected price-to-earnings ratio (PER) for this year is 7.0 times, and as the undisputed number one company in an oligopolistic market, it benefits the most from market growth. The lowered valuation and sustained high growth are positive factors.”

This content was produced with the assistance of AI translation services.