Offline Education Resumes... Megastudy Education Soars

7 Consecutive Trading Days of Gains... 26.8% Return Achieved This Month So Far

[Asia Economy Reporter Eunmo Koo] Megastudy Education, which suffered damage in the offline sector due to restrictions on large academy operations amid the spread of the novel coronavirus infection (COVID-19), is recently gaining momentum again with expectations of normalization of offline academies as social distancing measures are eased.

According to the Korea Exchange on the 23rd, Megastudy Education's stock price closed at 37,100 KRW, up 2.77% (1,000 KRW) from the previous trading day. It marked seven consecutive trading days of gains until the previous day, rising on all trading days this month except one. The October return also reached 26.8%, significantly outperforming the KOSDAQ index return of -4.2%, which has been undergoing adjustments this month. Megastudy also recorded a 9.4% return this month, including a 3.11% increase the previous day.

Recently, Megastudy Education's stock price has surged due to expectations of normalization of offline education as the spread of COVID-19 shows signs of calming down. Since social distancing was lowered to level 1 on the 12th, an increase in offline academy enrollment rates has been confirmed. Previously, Megastudy Education proactively expanded offline academies by increasing the capacity per center by 15-30% compared to last year, but the impact of COVID-19 this year increased fixed costs, worsening performance.

Jongmin Kim, a researcher at Samsung Securities, said, "This year, the offline sector was hit due to restrictions on large academy operations amid the spread of COVID-19, but recent easing of distancing measures has alleviated performance concerns," adding, "From next year, with the resumption of normal business activities, Megastudy Education's strength, equipped with competitiveness in both online and offline lectures, will stand out."

Since normal business activities are expected to be possible next year while complying with quarantine rules, a clear recovery in performance is anticipated. According to financial information provider FnGuide, Megastudy Education's operating profit next year is estimated to increase by 150.4% to 85.4 billion KRW compared to this year. Sales are also expected to expand by 20.9% to 554.7 billion KRW.

Changmin Yoon, a researcher at Shinhan Financial Investment, said, "Before the spread of COVID-19, Megastudy Education's offline enrollment rate in the high school sector exceeded 110%," adding, "The high school sector is expected to see sales growth of over 20% year-on-year just from the normalization effect of offline operations, and the online sector is also expected to grow this year due to oligopolization among top companies."