[Click eStock] "Megastudy Education Lowers Earnings Estimates... Target Price Down"

Yuanta Securities analyzed on the 14th that it is lowering the target price for Megastudy Education to 56,700 KRW due to downward revisions in earnings estimates. The investment rating was maintained as 'Buy.'

Megastudy Education recorded sales of 256 billion KRW and operating profit of 54.3 billion KRW in the third quarter. This represents a decrease of 1.9% and 7.9%, respectively, compared to the same period last year. Myungjun Kwon, a researcher at Yuanta Securities, explained, "The factors behind the sales slowdown include parents' preference for offline education and the government's policy to reduce private education expenses for middle school students by converting EBS Premium to free," but added, "Online high school education sales continue to grow, and the deficit in the civil servant division has narrowed."

Along with this, the earnings forecast for this year was also revised downward. He said, "The factors expected to improve this year's performance and valuation compared to last year were the acquisition effect of ST Unitas, growth in the high school online and offline market due to the expansion of medical school quotas, and growth in the elementary and middle school education market under the 2028 college entrance reform plan," but noted, "However, the acquisition did not proceed due to the Fair Trade Commission's decision, and the effect of the medical school quota was also minimal."

He expected a slight improvement next year. He analyzed, "The number of students born in 2007 preparing for next year's college entrance is expected to increase by 10.0% compared to those born in 2006, continuing the growth trend in high school online education," and added, "The effect of converting EBS Premium to free for middle school students is expected to gradually weaken after one year, while the deficit related to civil servant education continues to narrow."

He also expected the shareholder return policy to continue. He said, "The company has presented a shareholder return policy through share buybacks and dividends amounting to about 60% of separate net income from this year until 2026," and added, "If separate net income similar to the past three years is generated, more than 160 billion KRW will be used for shareholder returns over the next three years." He further noted, "The company has already conducted a 40 billion KRW share buyback this year, and the cancellation of the repurchased shares within the year is expected."