TAL(US:TAL) First Shanghai Securities·2024-08-09 08:31Investment Rating - The report assigns a "Buy" rating to the company with a target price of $13.8, indicating a potential upside of 47.3% from the current price of $9.35 [3][5]. Core Insights - The company has demonstrated strong revenue growth, with Q1 FY25 revenue reaching $414 million, a year-on-year increase of 50.4%. The GAAP net profit for the same period was $11.4 million, a significant recovery from a loss of $45.04 million in the previous year [2]. - The company is expanding its offline presence rapidly, with an estimated increase of over 400 teaching locations compared to 300-350 at the end of FY24. This expansion is expected to support growth during the peak summer season [2]. - The company is investing heavily in new business areas, particularly in educational training, which is projected to grow by 85% year-on-year in Q2, driven by the expansion of teaching points and new product launches [2]. Financial Overview - For FY25, the company forecasts total revenue of $2.00 billion, reflecting a growth rate of 34.32% compared to FY24's projected revenue of $1.49 billion. The net profit is expected to turn positive at $45.68 million, compared to a loss of $3.57 million in FY24 [4][6]. - The company reported a cash and short-term investment balance of $3.3 billion with no bank debt, indicating a strong liquidity position [2]. - Deferred revenue stood at $640 million, marking a 50% year-on-year increase, which reflects strong demand for the company's services [2]. Business Segments - The educational training business accounts for approximately 75% of total revenue, with a notable 80% growth in quality education training services. High school training services also showed stable growth [2]. - Content solutions, which include smart hardware and digital content, contributed about 25% to total revenue, with a growth rate exceeding 50% driven by sales of learning devices [2].