LS Securities said on the 20th that MegaStudyEdu's results are expected to improve this year on growth in the high school institutional sector and the transfer admission business. It maintained a target price of 60,000 won and a "buy" rating. MegaStudyEdu closed the previous trading day at 45,950 won.
LS Securities cited the following reasons for the expected improvement in the high school institutional sector, MegaStudyEdu's core institutional sector: ▲ an increase in takers repeating the College Scholastic Ability Test (CSAT) and multi-year retakers due to curriculum revisions ▲ growing demand for high school online lectures driven by middle school students' advanced studies ▲ a recovery in the offline institutional sector, which had slowed after a rival launched a boarding academy last year.
Jeong Hong-sik, an analyst at LS Securities, said, "In the domestic admissions market, a preference for medical schools, the gap between the CSAT and minimum CSAT grade requirements that is expanding involuntary repeat-taking, and opportunity factors for students who scored high on the CSAT after early decision admission are increasing university transfer quotas and transfer examinees," adding that the university transfer institutional sector is also estimated to see high growth.
In particular, this year there is a possibility of a sharp increase in repeat-takers due to issues with the CSAT English section and changes to the curriculum.
Jeong said, "MegaStudyEdu, which had maintained steady top-line growth every year, faltered last year due to a decline in sales following the sale of its civil service business institutional sector and a decrease in the school-age population in the elementary and middle school institutional sector," adding, "This year, a decline in the elementary school-age population and a slowdown in the middle school institutional sector are inevitable, but strong recovery in the high school institutional sector both online and offline, along with growth in the transfer admission business, should make annual earnings improvement possible."