[Click eStock] "Megastudy Education Strengthens Business Competitiveness with Acquisition of Gongdanki"

[Asia Economy Reporter Kwon Jae-hee] NH Investment & Securities maintained its 'Buy' rating on Megastudy Education on the 24th and raised the target price by 9% from the previous 110,000 KRW to 120,000 KRW. This is due to expectations that Megastudy Education's acquisition of ST Unitas will strengthen competitiveness in the civil service sector and increase corporate value.

Megastudy Education announced on the 21st that it will acquire 100% of ST Unitas shares. The acquisition price is 180 billion KRW. ST Unitas ceased operations of Hyunhyun Education (Skyedu) at the end of 2021 and sold Princeton Review in early 2022. Currently, it operates businesses such as Gongdangi (civil service), Youngdangi (English), and Beauty Rusha (beauty). However, the scheduled transfer date is by October 21, 2023, and approval from the Fair Trade Commission regarding monopoly concerns is still pending. As of the end of Q2 this year, Megastudy Education holds about 123 billion KRW, so the burden of borrowing for the acquisition is not significant.

Megastudy Education plans to enhance competitiveness in the civil service business and increase corporate value through synergy expansion with this acquisition. Gongdangi is the market leader in the civil service sector. If the acquisition is approved by the Fair Trade Commission, Megastudy Education's business division is expected not only to increase market share immediately (over 50%) but also to boost sales (around 200 billion KRW) and achieve the operating profit break-even point (BEP).

Jiyoon Jeong, a researcher at NH Investment & Securities, analyzed, "With the planned entry into the infant platform market in the first half of 2023 and the confirmed acquisition of ST Unitas, an increase in market share in the civil service sector is expected, leading to an expansion of the target student base in the domestic education industry and price increases through securing loyal customers across all age groups."