Gaotu(GOTU) 交银国际证券·2024-11-21 01:22Investment Rating - The report maintains a Buy rating for Gaotu Techedu (GOTU US) with a target price of $4.60, representing a potential upside of 76.9% from the current price of $2.60 [1][4] Core Views - Gaotu Techedu's business restructuring and marketing strategy adjustments are expected to show results by 2025, with potential cost savings of RMB 100 million from operational efficiency improvements [1][2] - The company's K12 business is expected to maintain a strong growth trajectory, with 70%+ YoY growth in Q3 2024, driven by strong demand and effective student retention strategies [1] - The adult education segment is undergoing strategic downsizing, with revenue expected to remain flat in Q3 2024, a downgrade from the previously expected 10%+ growth, resulting in a RMB 30 million reduction in revenue [1] - The company's K9 business is projected to grow by 150%+ in 2024, exceeding previous expectations, while the adult education segment is expected to see a low single-digit decline in Q4 2024 [2] - Despite strong revenue growth, the company is expected to face operating losses of RMB 1.27 billion in 2024, with a loss margin of 28%, due to increased marketing expenses and ongoing business adjustments [2] Financial Performance - Revenue is expected to grow by 50% YoY in 2024, reaching RMB 4.454 billion, driven by strong performance in the K12 and K9 segments [2][3] - Net loss is projected to widen to RMB 1.075 billion in 2024, compared to a net profit of RMB 51 million in 2023, due to higher operating costs and business restructuring [3] - The company's gross margin is expected to decline to 64% in Q3 2024, down 8 percentage points YoY, primarily due to the impact of reduced revenue from the adult education segment [1] - By 2025, the company expects to achieve a profit margin of 10-15%, driven by improved operational efficiency and reduced marketing expenses [2] Valuation - The target price of $4.60 is based on a 15x P/E ratio for the online education business, reflecting the company's expected profitability recovery by 2025 [2] - The valuation has been adjusted downward from the previous target of $6.50 due to ongoing business restructuring and increased marketing investments [2] Market Performance - Gaotu Techedu's stock has experienced a 28.18% decline year-to-date, with a 52-week high of $8.35 and a 52-week low of $2.35 [6] - The company's market capitalization stands at $386.10 million, with an average daily trading volume of 0.67 million shares [6]