TAL Education Unlikely to Maintain Current Growth Momentum

Equity Analyst

Cheng Wang

TAL Education, or TAL, repositioned itself as a smart learning solutions provider after regulatory changes in 2021 decimated the K-9 academic afterschool tutoring industry. It currently focuses on enrichment learning and content solutions. Enrichment learning offers nonacademic programs to students aged between two and 18 years. Content solutions offer learning content in both paper and digital formats to students.

Unlike New Oriental Education’s diversified revenue sources, TAL generated more than 90% of revenue from K-12 academic afterschool tutoring before the crackdown. As a result, TAL was hit harder than New Oriental. In the 12 months ending February 2023, TAL’s revenue was down 77% year over year, compared with 30% for New Oriental. We expect revenue to only recover to 56% of the 2022 level by fiscal 2028.

We estimate learning services, which include enrichment learning, high school tutoring, learning technology, and others, accounted for 72% of revenue in fiscal 2023. We expect this segment to grow at 13% CAGR from fiscal 2023 to 2028 driven primarily by enrichment learning. As an enrichment learning provider, TAL should benefit from its expertise gained from academic tutoring. Given the recent improvement in the regulatory environment, we see lower risk in high school academic afterschool tutoring now. We expect learning services to represent 66% of revenue by fiscal 2028.

We estimate content solutions accounted for only 15% of revenue in fiscal 2023, but we expect 34% contribution by 2028. We project 39% revenue CAGR from 2023 to 2028 underpinned by strong shipment growth of learning tablets.

We expect TAL to take losses in fiscal 2024 but turn profitable in 2025 as businesses scale up.

Business Strategy & Outlook

We do not think TAL Education has a moat.

TAL used to be the market leader in afterschool tutoring. Following the regulatory change in 2021, TAL spun off its K-9 academic afterschool tutoring business. It focuses on enrichment learning and content solutions now.

Enrichment learning offers nonacademic tutoring on science and creativity, coding and programming, humanity and aesthetics, and other programs. The market is highly fragmented. Demand is not as sticky as academic tutoring. The lack of means to measure the effectiveness makes it difficult for service providers to stand out from peers. Retention is often a problem when students are busy with academic coursework. Parents are not as willing to spend, and margins are lower compared with academic afterschool tutoring. In addition, the government has been tightening regulations on nonacademic afterschool tutoring. We think it is difficult to develop a moat in this business.

Content solutions offer TAL Education's educational content to individual learners. We acknowledge that TAL Education is a leader in learning content, but we do not see anything that cannot be replicated by competitors. TAL's learning tablet gained strong growth momentum after being launched in early 2023. We estimate it now has close to 10% market share by shipment in China. However, the learning hardware business is highly competitive with a low entry barrier. We do not think TAL can build a moat on this front.

None

Economic Moat

TAL Education Group

TAL Education Group operates as a holding company, which engages in the provision of after-school tutoring programs for primary and secondary school students. Its services are delivered through small classes, personalized premium services such as one-on-one tutoring, and online course offerings for primary and middle school students. The company was founded by Bang Xin Zhang and Yun Dong Cao on August 2003 and is headquartered in Beijing, China.

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TAL Education Group is a holding company, which engages in the provision of after-school tutoring programs for primary and secondary school students. The company was founded by Bang Xin Zhang and Yun Dong Cao in August 2003 and is headquartered in Beijing, China.

TAL Education Group (NYSE:TAL ) Q4 2024 Earnings Conference Call April 25, 2024 8:00 AM ET Company Participants Jackson Ding - IR Director Alex Peng - President and CFO Conference Call Participants Candis Chan - Daiwa Linda Huang - Macquarie Felix Liu - UBS Timothy Zhao - Goldman Sachs Caini Wang - CICC Operator Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call.

TAL Education Group (TAL) Q4 2024 Earnings Call Transcript

BEIJING , April 25, 2024 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the fourth quarter and the fiscal year ended February 29, 2024. Highlights for the Fourth Quarter of Fiscal Year 2024 Net revenues was US$429.6 million, compared to net revenues of US$269.0 million in the same period of the prior year.

TAL Education Group Announces Unaudited Financial Results for the Fourth Fiscal Quarter and the Fiscal Year 2024

BEIJING , March 29, 2024 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will release its unaudited financial results for the fourth quarter and fiscal year 2024 ended February 29, 2024, before the market opens on Thursday, April 25, 2024. The Company will host a corresponding conference call and live webcast at 8:00 a.m.

TAL Education Group to Announce Fourth Quarter and Fiscal Year 2024 Financial Results on April 25, 2024

TAL Education's Q3 FY 2024 revenue beat expectations, which drove its shares up by +5.7% on the day of the results release. The introduction of new learning devices to the market and a faster pace of share repurchases could be catalysts for TAL. My rating for TAL is upgraded to a Buy in consideration of potential catalysts and the company's positive sales growth momentum.

TAL Education: Turning Bullish On Revenue Beat And Potential Catalysts (Rating Upgrade)

TAL Education Group (TAL) Q3 2024 Earnings Call Transcript

BEIJING, Jan. 25, 2024 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the third quarter of fiscal year 2024 ended November 30, 2023. Highlights for the Third Quarter of Fiscal Year 2024 Net revenues was US$373.5 million, compared to net revenues of US$232.7 million in the same period of the prior year.

TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2023

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BEIJING , Dec. 29, 2023 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will release its unaudited financial results for the third quarter of fiscal year 2024 ended November 30, 2023, before the market opens on Thursday, January 25, 2024. The Company will host a corresponding conference call and live webcast at 7:00 a.m.

TAL Education Group to Announce Third Quarter of Fiscal Year 2024 Financial Results on January 25, 2024

BEIJING, Nov. 17, 2023 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will hold its annual general meeting of shareholders at 4/F Heying Center, Xiaoying West Street, Haidian District, Beijing, China, on November 29, 2023 at 11:00AM (Beijing time). No proposal will be submitted for shareholder approval at the annual general meeting.

TAL Education Group to Hold Annual General Meeting on November 29, 2023

TAL Education Group (NYSE:TAL ) Q2 2024 Earnings Conference Call October 26, 2023 8:00 AM ET Company Participants Jackson Ding - Investor Relations Director Alex Peng - President & Chief Financial Officer Conference Call Participants Felix Liu - UBS Linda Huang - Macquarie Candis Chan - Daiwa Caini Wang - CICC Lucy Yu - Bank of America Operator Ladies and gentlemen, good day, and thank you for standing by. Welcome to TAL Education Group's Second Quarter of Fiscal Year 2024 Earnings Conference Call.

TAL Education Group (TAL) Q2 2024 Earnings Call Transcript

BEIJING , Oct. 26, 2023 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2024 ended August 31, 2023. Highlights for the Second Quarter of Fiscal Year 2024 Net revenues was US$411.9 million, compared to net revenues of US$294.1 million in the same period of the prior year.

TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2023

TAL Education Group's share price has done well in recent months, thanks to its Q1 results beat and favorable AI-related developments. However, the downside risk associated with TAL Education potentially reporting below-expectations results going forward has become more significant. A Hold rating for TAL Education Group is maintained; expectations for TAL Education are elevated, implying that positives have been priced into its shares.

TAL Education Group: Elevated Expectations

BEIJING , Sept. 28, 2023 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will release its unaudited financial results for the second quarter of fiscal year 2024 ended August 31, 2023, before the market opens on Thursday, October 26, 2023.

TAL Education Group to Announce Second Quarter of Fiscal Year 2024 Financial Results on October 26, 2023

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TAL Education Group (NYSE:TAL ) Q1 2024 Earnings Conference Call July 27, 2023 8:00 AM ET Company Participants Jackson Ding - IR Director Alex Peng - President and CFO Conference Call Participants Candis Chan - Daiwa Felix Liu - UBS Operator Ladies and gentlemen, good day and thank you for standing by. Welcome to TAL Education Group First Quarter of Fiscal Year 2024 Earnings Conference Call.

TAL Education Group (TAL) Q1 2024 Earnings Call Transcript

BEIJING , July 27, 2023 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a smart learning solutions provider in China, today announced its unaudited financial results for the first quarter of fiscal year 2024 ended May 31, 2023. Highlights for the First Quarter of Fiscal Year 2024 Net revenues was US$275.4 million, compared to net revenues of US$224.0 million in the same period of the prior year.

TAL Education Group Announces Unaudited Financial Results for the First Fiscal Quarter Ended May 31, 2023

BEIJING , July 7, 2023 /PRNewswire/ -- TAL Education Group ("TAL" or the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it will release its unaudited financial results for the first quarter of fiscal year 2024 ended May 31, 2023, before the market opens on Thursday, July 27, 2023. The Company will host a corresponding conference call and live webcast at 8:00 a.m.

TAL Education Group to Announce First Quarter of Fiscal Year 2024 Financial Results on July 27, 2023

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BEIJING , May 31, 2023 /PRNewswire/ -- TAL Education Group (the "Company") (NYSE: TAL), a smart learning solutions provider in China, today announced that it filed its annual report on Form 20-F for the fiscal year ended February 28, 2023 (the "Annual Report") with the Securities and Exchange Commission (the "SEC") on May 31, 2023, U.S. Eastern Time. The Annual Report can be accessed and downloaded on the Company's website at https://ir.100tal.com/, as well as on the SEC's website at http://www.sec.gov.

TAL Education Group Files Its Annual Report on Form 20-F

LOS ANGELES, CA / ACCESSWIRE / May 30, 2023 / The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against TAL Education Group ("TAL Education" or "the Company") (NYSE:TAL) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission. Investors who purchased the Company's securities between June 14, 2022 and March 14, 2023, inclusive (the "Class Period"), are encouraged to contact the firm before May 30, 2023.

FINAL DEADLINE TODAY: The Schall Law Firm Encourages Investors in TAL Education Group with Losses to Contact the Firm

NEW YORK , May 30, 2023 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of  TAL Education Group ("TAL" or the "Company") (NYSE: TAL).  Such investors are advised to contact Robert S.

SHAREHOLDER ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of TAL Education Group - TAL

NEW YORK , May 30, 2023 /PRNewswire/ -- The Klein Law Firm announces that a class action complaint has been filed on behalf of shareholders of TAL Education Group (NYSE: TAL) alleging that the Company violated federal securities laws. This lawsuit is on behalf of persons or entities who purchased or otherwise acquired TAL American Depository Shares between June 14, 2022 and March 14, 2023, both dates inclusive.Lead Plaintiff Deadline: May 30, 2023 No obligation or cost to you.

TAL ALERT: The Klein Law Firm Announces a Lead Plaintiff Deadline of May 30, 2023 in the Class Action Filed on Behalf of TAL Education Group Shareholders

LOS ANGELES, CA / ACCESSWIRE / May 29, 2023 / The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against TAL Education Group ("TAL Education" or "the Company") (NYSE: TAL) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission. Investors who purchased the Company's securities between June 14, 2022 and March 14, 2023, inclusive (the "Class Period"), are encouraged to contact the firm before May 30, 2023.

MAY 30 FINAL DEADLINE: The Schall Law Firm Encourages Investors in TAL Education Group with Losses to Contact the Firm

NEW YORK--(BUSINESS WIRE)--WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of American Depositary Shares (“ADSs”) of TAL Education Group (NYSE: TAL) between June 14, 2022 and March 14, 2023, both dates inclusive (the “Class Period”), of the important May 30, 2023 lead plaintiff deadline in the securities class action first filed by the Firm. SO WHAT: If you purchased TAL securities you may be entitled to compensation without payment of any out of pocket fees or costs.

TAL FINAL DEADLINE TOMORROW: ROSEN, A LEADING NATIONAL FIRM, Encourages TAL Education Group Investors to Secure Counsel Before Important May 30 Deadline in First Filed Securities Class Action Commenced by the Firm – TAL

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