NH Investment & Securities analyzed on the 13th that a turnaround in performance is expected for Mega Study Education next year, and that shareholder return measures will be strengthened. However, the target stock price was lowered from the previous 68,000 won to 60,000 won, and an investment opinion of ‘buy’ was presented. The closing price of Mega Study Education on the previous trading day was 42,150 won.
NH Investment & Securities projected that the consolidated revenue of Mega Study Education for the fourth quarter of this year will decrease by 1% year-on-year to 206.4 billion won, while operating profit is expected to increase by 73% to 2.6 billion won. Typically, the fourth quarter is a low season for the high school institutional sector, resulting in small profit margins, but a turnaround in the performance of the adult institutional sector is expected to yield better profitability compared to the previous year.
Revenue from the kindergarten, elementary, and middle school sectors is estimated to decrease by 1% year-on-year to 51.5 billion won, while operating profit is expected to increase by 1% to 2.3 billion won. For the high school sector, revenue is anticipated to decline by 4% year-on-year to 116.9 billion won, with an operating loss of 2.4 billion won.
Research Institute Jeong Ji-yoon said, “The increase in online payment amounts for middle school was due to the base effect resulting from the free transition of EBS lectures last July,” adding, “While revenue is expected to decrease as some offline academies (Gangnam comprehensive academy for re-examination and Ansung dormitory) are downsized for operational efficiency, the payment amount for the Mega Pass in the 2026 academic year is expected to show a slight increase.”
In the adult institutional sector, revenue is estimated at 37.8 billion won, an increase of 7% compared to the previous year, with operating profit of 2.5 billion won. Research Institute Jeong noted, “Due to the successful performance of the Ivy Kim Young sector and improvements in profitability in the beauty and computer sectors, as well as a reduction in losses in the public service sector, a profit trend is expected.”
NH Investment & Securities explained the reason for adjusting the target stock price, noting that it was due to the adjustment of the target multiple to a recent average price-to-earnings ratio (PER) band of 7.5 times over the past two years.
Research Institute Jeong said, “A turnaround in overall performance is projected next year with increased earnings in the high school institutional sector and profit generation in the adult institutional sector,” and added, “More than 60% of the separate net profit will be used for dividends, share buybacks, and complete stock cancellations, and efforts to strengthen shareholder return will continue.”