Investment Rating - The report maintains a "Buy" rating for TAL Education Group (TAL US) with a target price of 13.80,indicatingapotentialupsideof31.410.50 [1][3][6]. Core Insights - TAL Education's revenue for Q2 FY2025 reached 619million,representinga5065 million, with an operating margin of 10%, which is a decline of approximately 2 percentage points year-over-year but still better than expectations [1]. - The report highlights that the learning services segment saw an estimated revenue growth of around 80% year-over-year, driven by strong demand and an increase in enrollment due to the expansion of teaching points [1]. - The sales of learning machines also maintained high growth, with estimated sales of 100,000 to 150,000 units in Q2, supported by the launch of new products [1]. - Marketing expenses as a percentage of revenue increased by nearly 6 percentage points to 29%, while management expenses decreased by 9 percentage points to 19%, indicating ongoing operational efficiency improvements [1]. Financial Projections - For Q3 FY2025, which is typically a slower season for the education industry, revenue is expected to grow by 39% year-over-year to 520million,supportedbytheperformanceofsmallclasstrainingandnewproductsales[1].−Thereportprojectsanadjustedoperatingprofitmarginof−3.52.103 billion, with a year-over-year growth rate of 41.1% [2][5][8]. Valuation - The report adjusts the FY2025 operating profit estimate to 48million,reflectingbetter−than−expectedperformanceinthecurrentquarter,withaprofitmarginof2146 million and 274millionrespectively[1].−Thevaluationmethodologyincludesa20xprice−to−earningsratiofortheeducationbusinessanda1xprice−to−salesratioforlearningmachines,supportingthetargetpriceof13.80 [1].
