Summary of Conference Call Notes on China's K-12 Education Sector and TAL Education Company and Industry Overview - **Company**: TAL Education Group - **Industry**: K-12 Education Sector in China Key Points and Arguments Growth Paradigm Shift in K-12 Education - The K-12 education sector in China is experiencing a growth paradigm shift due to several factors: 1. **Declining Birth Rates**: A reduction in the K-9 student population is expected, leading to long-term pressure on the Total Addressable Market (TAM) despite industry fragmentation [2] 2. **Consumer Sensitivity**: Increased consumer sensitivity to pricing and macroeconomic changes due to softer macro conditions and the two-child policy, although household education spending remains a staple [2] 3. **Diversified Learning Scenarios**: A rise in diversified learning scenarios and fragmented learning demand, with an estimated 15 million students using AI learning tablets and 6 million using self-study rooms [2] Industry Trends and Company Performance - **AI Education Tools**: The scaling up of AI education software tools, such as ByteDance's Doubao Study, is expected to continue into 2026 [3] - **Sales Growth of AI Learning Tablets**: Sales growth for AI learning tablets may moderate, with stabilized Average Selling Price (ASP) but pressure on Gross Profit Margin (GPM) due to tightening memory supply and cost increases [3] - **TAL Education's Position**: TAL is preferred due to its diversified product offerings backed by AI technology investments and visibility of group-level profitability improvement [4] Financial Projections and Valuation - **TAL's Financial Outlook**: - Target Price: US$15.1, implying a 32% upside [4] - Revenue growth for FY26 is projected at 21% year-over-year, with non-GAAP Operating Profit Margin (OPM) expected to expand by 4.5 percentage points [10] - **Comparison with Competitors**: - New Oriental (EDU) is rated Neutral with a target price of US$60, while Gaotu Techedu (GOTU) is rated Sell [11] - TAL's learning center growth is expected to moderate to 28% year-over-year in FY26 [27] Challenges and Risks - **Pressure on Overseas Study Demand**: The number of students studying overseas has dropped by 24% from 2020-2024, indicating a potential risk for companies involved in overseas education [30] - **Regulatory Changes**: Potential regulatory changes in the education sector could impact future growth [72] Emerging Trends in AI Education - **AI-Powered Teaching Courses**: The evolution of AI applications in education is moving towards systematic tutoring courses powered by AI, with new formats like AI 1-on-1 courses gaining traction [45][46] - **Market Response**: Companies like New Oriental and Zebra Group are launching AI-driven courses, indicating a competitive landscape in AI education [47] Conclusion - The K-12 education sector in China is undergoing significant changes driven by demographic shifts, consumer behavior, and technological advancements. TAL Education is positioned favorably within this evolving landscape, although challenges such as declining overseas study demand and regulatory risks remain pertinent. Investors should monitor these trends closely as they could impact future performance and valuations.

Financial Data and Key Metrics Changes - Brookfield Asset Management has exceeded its five-year targets, with fee-bearing capital growing from $277 billion to $563 billion, representing a 200 basis point outperformance [37] - Fee-related earnings (FRE) increased from $1.3 billion to $2.7 billion, demonstrating strong growth despite market uncertainties [38] - The company achieved a 15% growth rate over the past five years, with a projected 16% growth rate moving forward [42][51] Business Line Data and Key Metrics Changes - The flagship funds have grown from $53 billion to $93 billion in fee-bearing capital, a 75% increase [39] - Complementary strategies have seen significant growth, increasing from $14 billion to $74 billion, marking a fivefold increase [40] - The credit business expanded from $100 billion to $250 billion, a 130% increase, showcasing diversification and growth in core competencies [41] Market Data and Key Metrics Changes - The global distributed generation (DG) market is expected to reach over $500 billion by 2030, with Brookfield's expertise positioning it well for growth in this sector [31] - The K-12 education sector, represented by the GEMS investment, shows strong margins and high cash flow conversion, indicating a stable market opportunity [57] Company Strategy and Development Direction - Brookfield aims to double its size in less than five years by leveraging products, partnerships, and individual investor markets [28][51] - The company is focusing on digitalization, de-globalization, and decarbonization as key investment themes, which are expected to drive future growth [7][8] - Brookfield is expanding its wealth solutions platform, targeting high net worth and retail investors, with a goal to raise $10 billion this year [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering on growth targets due to strong investor demand and a large opportunity set that aligns with their expertise [37][56] - The company highlighted the importance of maintaining a disciplined approach to protect performance amid market volatility [18] - Management believes that the best is yet to come, with multiple growth levers available to exceed base case projections [56] Other Important Information - Brookfield has simplified its corporate structure and is now headquartered in the U.S., enhancing its market cap and positioning for index inclusion [48] - The company has established a strong presence in the Middle East through strategic investments like GEMS, which provides a competitive advantage in sourcing opportunities [58][61] Q&A Session Summary Question: What are the key differentiators for Brookfield's private equity fund? - The focus is on operational transformation and value investing, targeting industrial companies and essential services where Brookfield has an information advantage [64]