Stock Price Rises 26.7% in Last 3 Months
Gangnam Daeseong Medical School Building Expansion... Benefiting from Medical School Entrance Exam Boom
Amid forecasts that the 'medical school craze' will intensify this year, Digital Daesung's stock price is also on the rise. The acquisition of a 50% stake in Hobup Gangnam Daesung Dormitory Academy, which operates Gangnam Daesung's 'Medical School Center,' is boosting expectations for improved performance, contributing to the increase in corporate value.
According to the financial investment industry on the 3rd, Digital Daesung's stock price has risen about 26.7% over the past three months. Considering that the KOSDAQ index rose 8.5% during the same period, the return on investment compared to the market is 18.2 percentage points.
Founded in 2000, Digital Daesung is an online and offline education company. Through Hanuri Open Education, it provides Korean language and essay education services for elementary and middle school students. It also offers online education through Daesung MyMac and offline education through Gangnam Daesung Dormitory Academy and Busan Daesung Academy. Last year, on a consolidated basis, the sales ratio was 21.6% for the elementary and middle school segment, 77.5% for the high school segment, and 0.8% for others.
Last year's performance recorded sales of 211.5 billion KRW and operating profit of 25 billion KRW. Sales increased by 0.3% compared to the previous year, but operating profit decreased by 11.8%. Profitability worsened due to a decline in students attending Hanuri Reading and Essay Education.
As the low birthrate issue continues, the school-age population is decreasing. This is why competition in the domestic private education market is fierce. However, with the average private education expenditure per person increasing, the overall market size is not shrinking. To continue growth, Digital Daesung decided to acquire a 50% stake in Hobup Gangnam Daesung Dormitory Academy. It will acquire new shares through a third-party allotment paid-in capital increase at the end of August this year. The investment is explained as aimed at strengthening medical school entrance exam capabilities and creating synergy effects with the existing Gangnam Daesung Dormitory Academy.
Seong Hyun-dong, a researcher at KB Securities, said, "Hobup Gangnam Daesung Dormitory Academy operates the Gangnam Daesung Medical School Center exclusively for top-tier students," adding, "After completing about a 40% increase in capacity by June, we expect significant performance contributions starting next year."
On March 29, Digital Daesung additionally acquired shares in Igam, a private mock exam specialist company, by investing 30.9 billion KRW. Digital Daesung now holds an 84% stake in Igam. The reason for the additional acquisition is explained as securing mid- to long-term growth drivers and creating synergy with affiliates. In particular, it is expected that profitability will improve through an increase in online lecture fees in the high school segment.
Amid controversy over the increase in medical school quotas, the number of examinees is likely to rise. The number of graduates applying for the CSAT increased from about 140,000 in 2012 to about 160,000 last year. They accounted for 32% of all CSAT applicants, marking the highest ratio ever recorded. According to the Ministry of Education and the Korea Council for University Education, the increase in medical school quotas for 32 universities nationwide for the 2025 academic year is estimated at 1,509 students. This is nearly a 50% increase compared to the 2024 academic year quota. The 'medical school craze' is expected to be strong among examinees. Na Seung-du, a researcher at SK Securities, explained, "Along with the atmosphere of expanding medical school admission quotas, demand for dormitory academies for medical school entrance exam preparation among examinees will continue."
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