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TAL Education Group ADR TAL

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TAL Education: Uncertainties and Risks Ahead

Jenny Tsai Senior Equity Analyst

Analyst Note

| Jenny Tsai |

We believe the measures announced by the Chinese government on July 24, 2021 to alleviate stress for students in mandatory education and after-school tutoring will impact the business model of some private sector education companies. The China Ministry of Education announced on Sept. 7, 2021 that all after-school tutoring companies are required to become non-profit organizations before year-end 2021 and implemented a price hike cap of 10%. Most of the after-school tutoring companies are still in discussions with their legal team and local government on the structure required by the central government, so investors lack visibility into the future cash flows of the business.

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Company Profile

Business Description

Founded in 2003, TAL Education is one of the leading K-12 after-school tutoring providers in China. The firm offers tutoring services to students from pre-school to the twelfth grade via small classes, one-on-one personalized premium services, and online courses. In fourth quarter fiscal 2021, TAL's small classes account for 53% of its revenue, one-on-one 6%, and 32%. Its tutoring services cover the core academic subjects in China’s school curriculum, such as Math (K-12), English (K-12), Chinese (K-12), Physics (Grade 8-12), Chemistry (Grade 9-12), and Biology (Grade 10-12). TAL's learning centers currently cover 101 cities in China and a total of 1,098 learning centers. In fourth-quarter fiscal 2021, current normal priced long-term course student enrolment was 6.7 million.

6 Danling Street, 15th Floor, Danling SOHO
Beijing, 100080, China, People's Republic of
T +86 1052926658
Sector Consumer Defensive
Industry Education & Training Services
Most Recent Earnings Feb 28, 2021
Fiscal Year End Feb 28, 2022
Stock Type
Employees 70,914