[Click eStock] "Megastudy Education, Performance Level-Up Expected Due to College Admission System Changes"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities forecasted on the 5th that Megastudy Education's performance will level up starting this year due to structural changes in the university entrance exam system, and raised the target stock price from the previous 75,000 KRW to 90,000 KRW. The investment opinion was maintained as 'Buy.'

Jiyoon Jeong, a researcher at NH Investment & Securities, explained, "Considering the structural changes in the university entrance exam system and steady online education demand by age group, we raised the earnings estimates for all business divisions and changed the earnings base year to 2022 for valuation calculation, resulting in a 20% increase in the target stock price."

This year marks the first year of structural changes in the university entrance exam system, including the implementation of an integrated liberal arts and science CSAT, an increase in the proportion of regular admissions, and a decline in the EBS linkage rate. Researcher Jeong stated, "Megastudy Education has the industry's top-level instructor lineup in mathematics and science inquiry areas, and considering the recruitment of new students for the College of Pharmacy in 2022 and the increase in regular admissions, a direct benefit from the increase in Megapass subscribers is expected," adding, "The structural changes in the university entrance exam system will be a turning point for Megastudy Education's performance to level up."

The second-quarter performance this year is also expected to exceed market expectations. NH Investment & Securities estimated Megastudy Education's consolidated sales for the second quarter to be 177.7 billion KRW, a 56% increase compared to the same period last year, and operating profit to be 30.3 billion KRW, a 129% increase. The high school division is expected to record sales of 115.5 billion KRW and operating profit of 23.4 billion KRW, increasing by 53% and 107% respectively compared to the same period last year, driving strong performance. Researcher Jeong said, "Starting from the June mock exam, repeat test-takers have actively entered, leading to growth in Megapass and increased sales of related textbooks," adding, "Typically, textbook sales in the second quarter decrease by more than 30% compared to the previous quarter, but this year, due to the increase in the proportion of regular admissions and the decline in the EBS linkage rate causing substitute demand, the decrease is expected to be smaller than in the past."