Analyst Note
| Jenny Tsai |We maintain our narrow-moat rating for TAL Education and lower our fair value estimate to USD 70 from USD 83, based on DCF, which implies 77.9 times fiscal year 2022 P/E versus industry peers' average of 37.5 times P/E. Our fair value estimate revision is mainly to reflect the lowering of our estimated fiscal 2021 earnings to net losses of USD 11 million from the previous net profit of USD284 million. This is as we factored in lower third-quarter results and anticipate weak fourth-quarter results, while we also revised down our longer-term margin trend with slower margin improvement from the previous expectation.