[Click eStock] "Cheongdam Learning, Sales Growth Expected with Entry into Chinese Market"

Hana Financial Investment Report
Projected Sales of 180.6 Billion KRW This Year... 3.2% Increase YoY

[Asia Economy Reporter Minji Lee] Hana Financial Investment expressed on the 27th that Cheongdam Learning is expected to improve its performance through entry into the Chinese market. It forecasted that this year's sales and operating profit will increase by 3.2% and 8%, respectively, compared to the same period last year, reaching 180.6 billion KRW and 24.4 billion KRW.

Cheongdam Learning announced on the 21st that it completed the sale with its Chinese partner, Xin Nanyang, and that the establishment of a Chinese JV is imminent. The JV ownership ratio will be 33 to 67 between Cheongdam Learning and Ang Education, a subsidiary of Xin Nanyang.

Researcher Dohyun Kim of Hana Financial Investment said, "Due to the impact of the novel coronavirus infection (COVID-19), online education demand is accelerating in China, prompting Cheongdam Learning to expedite the application of its online platform," adding, "The royalty (usage fee) per student in China is estimated to be about 5 dollars." It is expected that royalty revenue will be recognized sequentially starting from 10,000 enrolled students at KAYDUN English Academy, which was acquired by the Chinese partner company.

The number of students in the Vietnam region, where royalty income is currently being recognized, is expected to reach 50,000 within the year. By renewing contracts with Vietnamese partners and expanding royalties from only April's content to also include Cheongdam Language Academy and iGarden content, the royalty amount is expected to increase from 2021.

In the second quarter, the company's operating profit was 5.6 billion KRW, down 18% year-on-year, but sales increased by 3% to 44.3 billion KRW. Due to continuous new content releases and expanded marketing since the first quarter, the number of students increased by 7% compared to the previous year as of July, largely reflecting the effect of being the first in the industry to successfully transition online. The conversion of about 80% of offline students to online (live classes) also contributed to sales growth.

Researcher Dohyun Kim said, "Although the proportion of online attendance dropped to 40% as offline lectures increased in the third quarter, a 100% online attendance transition is also possible," adding, "In the second half of the year, we will flexibly respond according to the COVID-19 situation to increase sales." He further added, "This year, a high dividend tendency will be maintained, and dividends of 800 to 1,000 KRW per share are expected to be paid."