TAL(TAL) ZHESHANG SECURITIES·2024-08-18 02:23Investment Rating - Maintain "Buy" rating for TAL [5][6] Core Views - TAL's FY2025Q1 revenue reached $414 million, up 50.4% YoY, exceeding Bloomberg consensus by 5% [1] - Non-GAAP operating profit turned positive at $0.876 million with a 0.2% margin, better than Bloomberg's -7% expectation [1] - The company is expected to increase investments in Q2 FY2025, which may temporarily pressure margins but is aimed at future growth [4] Business Segments Learning Services - Offline quality education revenue grew by high double digits YoY in FY2025Q1, with over 400 outlets compared to 200 in FY2024Q1 [2] - Online school business saw strong performance in customer acquisition, with high double-digit sales growth on Douyin from January to July [2] - Deferred revenue increased to $640 million in FY2025Q1, up 66% YoY [2] Content Solutions - Launched the "Xueersi Learning Machine Classic Edition 2024" in May 2024, with estimated sales of 100,000 units in Q1 FY2025 [3] - The company is leveraging AI and technology to enhance product differentiation, such as the new math search and Q&A tool "Jiuzhang Suishiwen" [3] Financial Forecasts - Revenue for FY2025-FY2027 is projected to be $2.064 billion, $2.603 billion, and $2.951 billion, with YoY growth of 38%, 26%, and 13% respectively [5] - Net income attributable to shareholders is expected to be $17 million, $111 million, and $183 million for FY2025-FY2027 [5] - Non-GAAP net income is forecasted at $104 million, $196 million, and $266 million for the same period [5] Historical Context - TAL achieved a 46% CAGR in revenue from FY2010 to FY2021, driven by high-quality education services and standardized teaching systems [4] - Current store count of 400+ represents 36% of pre-"Double Reduction" levels, indicating significant growth potential [4]