[Click eStock] "Cheongdam Learning, Merger Expectations Rise... Opportunity for Bottom Buying"

[Asia Economy Reporter Kwon Jaehee] Hana Financial Investment stated on the 26th that regarding Cheongdam Learning, the expectation from the CMS Edu absorption merger makes buying at the low point due to market adjustment valid.

Cheongdam Learning and CMS Edu have a combined total of 150,000 enrolled students domestically and internationally, and about 500 offline learning centers, so the launch of integrated services after the merger is expected to rapidly expand mainly among existing enrolled students.

Kim Doohyun, a researcher at Hana Financial Investment, analyzed, "It is judged that securing enrolled students will continue based on high-quality educational content after the merger," adding, "The current 2022 expected price-earnings ratio (PER) of 7.7 times is a harsh valuation for Cheongdam Learning, which has a growth stock educational platform equipped with the metaverse and a value stock with an expected earnings per share (EPS) of 2,000 won and a dividend yield in the 6% range based on the current stock price, so there is upside potential."

C3 Coding, the growth engine of Creverse (the new name of the merged corporation), is also expected to achieve triple-digit sales for the first time this year.

From the online business perspective, CMS Edu is expected to improve profitability by adopting Cheongdam Learning’s online business model. Cheongdam Learning’s online service "iLearning" was simultaneously provided to offline enrolled students and had a higher price than CMS Edu. Starting from March, the iLearning service will also be introduced to CMS Edu’s offline enrolled students, making price increases possible. Even if applied to only about 70% of all directly managed enrolled students, an annual sales increase of over 5 billion won is expected, and since it is a structure without costs, it is expected to directly contribute to operating profit. Additionally, by launching an integrated service combining Cheongdam Learning’s metaverse education platform "Bouncy" and CMS Edu’s "NO.ISY," sales growth in the online business after the merger is anticipated.

Regarding the offline business, the Creverse Campus business, an integrated English and thinking skills education service, started in eight metropolitan areas from early January this year and is expected to expand to 15 areas within the year. In March, Creverse plans to expand early childhood education, the stage before Creverse Campus, by launching the premium kindergarten brand "Creverse Kids" of the merged corporation. It is a premium kindergarten covering English, math, and coding education and has already secured all enrolled students.

Researcher Kim evaluated, "The cross-marketing effect of the two companies is expected to be fully realized through this merger."

Meanwhile, by absorbing Cheongdam Learning and CMS Edu, the company name will be changed to Creverse. After the merger approval extraordinary general meeting on the 28th, the stock purchase right application will close on February 17. From March 1, 4,019,937 new shares will be issued after the merger on the 17th. Based on the current stock price at the time of the merger, the expected market capitalization is about 354.9 billion won, corresponding to a 2022 PER of 9.1 times. Excluding treasury shares (1,848,616 shares of CMS Edu held by Cheongdam Learning before the merger), the market capitalization is about 298.1 billion won, and the 2022 PER falls to 7.7 times.

The closing price of Cheongdam Learning the previous day was 30,750 won. The 2022 performance of Cheongdam Learning is expected to be sales of 265.8 billion won and operating profit of 49.2 billion won, which represent increases of 25.1% and 47.9%, respectively, compared to the same period last year.