TAL Education Group
Investor Presentation
January 2021
Disclaimer
This presentation has been prepared by TAL Education Group (the "Company") solely for information purpose. By viewing or accessing the information
contained in this material, you hereby acknowledge and agree that no representations, warranties or undertakings, express or implied, are made by the Company or any of its directors, shareholders, employees, agents, affiliates, advisors or representatives as to, and no reliance should be placed upon, the accuracy, fairness, completeness or correctness of the information or opinions presented or contained in this presentation. None of the Company or any of its directors, shareholders, employees, agents, affiliates, advisors or representatives accept any responsibility whatsoever (in negligence or otherwise) for any loss howsoever arising from any information presented or contained in this presentation or otherwise arising in connection with the presentation. The information presented or contained in this presentation is subject to change without notice and its accuracy is not guaranteed.
This presentation does not constitute an offer to sell or issue or an invitation or recommendation to purchase or subscribe for any securities of the Company for sale in the United States or anywhere else. No securities of the Company may be sold in the United States without registration with the United States Securities and Exchange Commission (the "SEC") or an exemption from such registration pursuant to the Securities Act of 1933, as amended (the "Securities Act") and the rules and regulations thereunder. No part of this presentation shall form the basis of or be relied upon in connection with any contract or investment decision in relation to any securities or otherwise. This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company. Nothing contained in this presentation shall be relied upon as a promise or representation as to the past or future performance of the Company. Past performance does not guarantee or predict future performance. You acknowledge that any assessment of the Company that may be made by you will be independent of this presentation and that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company.
Certain statements in this presentation, and other statements that the Company may make, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These statements reflect the Company's intent, beliefs or current expectations about the future. These statements can be recognized by the use of words such as "expects," "plans," "will," "estimates," "projects," "intends," "anticipates," "believes," "confident" or words of similar meaning. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Company's operations and other factors, many of which are beyond the Company's control, and accordingly, actual results may differ materially from these forward-looking statements. The Company or any of its affiliates, advisers or representatives has no obligation and does not undertake to revise forward-looking statements to reflect future events or circumstances.
Mission, Vision and Values
Mission
Making Education Better with Love and Technology
Vision
To be a Respectable Education Institution
Values
Customer Orientation, Pragmatism, Innovation, Cooperation
Company Highlights
Industry Leader in Large and Attractive
Market
Strong Brand, Recognized for High Quality Teaching, Proprietary Content, and Student Outcomes
Significant Scale and Reach Offline
and Online
Strong Operational Performance with
Consistent Growth
High Visibility Recurring Revenue Model
with Strong Cash Flow
Leading Edge of Science and Technology
Development
What We Do - Core Business Units
We Cover Core Subjects in the K-12 School Curriculum 1
Primary School | Middle School | High School | ||||||||||
K | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
Mathematics
English
Chinese
Physics
Chemistry
Biology
Politics
History
Geography
Small Class | Online School |
Personalized Premium Services (1-on-1)
1 "●"Denotes currently offered course
Reform of College Entrance Examination Creates New Opportunities
Examination-Focused Education System
Higher
Education
College Entrance
Examination
- "Gao Kao"
High School Entrance
Examination
- "Zhong Kao"
Middle School Entry Selection Process -"Xiao Sheng Chu"
Primary School Entry Selection Process -"You Sheng Xiao"
1 "3+Comprehensive Exam" to "3+3"
3+Comprehensive Exam: Choose between Comprehensive Liberal Arts and Comprehensive Science
3+3: Choose 3 courses among Physics, Chemistry, Biology, Politics, History and Geography
- Reform of college entrance exam has influenced High School Entrance Exam.
- Longer period, more Complicated rules and increased uncertainty push students to prepare earlier.
2 Gradually Uniform College Entrance Exam
- Efficiency of content development will improve.
Based Upon High Teaching Quality and Differentiated Proprietary Content
Optimized Teacher Management System
Selective Hiring | Comprehensive | Rigorous | ||
Process | Training | Evaluation Process | ||
•
•
Top university graduates Rounds of tests and interviews
•
•
Comprehensive new teacher training Regular ongoing training
•
•
Continuous evaluation Performance based compensation
Proprietary Content Development
Review local curriculum | ||||||||
Analyze latest | trends | Develop tailored course | Collect teacher and | |||||
requirements | materials | student feedback | ||||||
Regular evaluation and improvement process
Experienced in-house content | External education experts |
development team | hired as advisors |
IP transfer and content license
agreements with leading international publishers for English subject areas
Straightforward Strategy to Expand Scale Both Offline and Online
Further penetrate | Enter new | Polishing online | Enhance content | Maintain premium |
existing markets | markets: Target to | and mobile | offering across | pricing while |
by both online and | enter new cities | offerings, | subjects and grade | diversifying |
offline offerings | each year | expanding online | levels | programs |
engagement | ||||
Large Untapped Geographic Expansion Opportunity
Incremental Center Opportunities
# of Small Class Centers | # of | ||||
Year | # of One- | ||||
# of | # of Firstleap | Total | |||
City | of | on-One | |||
Learning | |||||
Entry | Peiyou | and Mobby | Centers | ||
Centers | Centers | Centers | |||
Beijing | 2003 | 88 | 37 | 27 | 152 |
Shanghai | 2008 | 70 | 2 | 16 | 88 |
Nanjing | 2011 | 48 | 23 | 8 | 79 |
Guangzhou | 2009 | 58 | 2 | 17 | 77 |
Shenzhen | 2010 | 51 | 1 | 15 | 67 |
Hangzhou | 2011 | 48 | 7 | 55 | |
Tianjin | 2008 | 33 | 6 | 39 | |
Chongqing | 2012 | 31 | 6 | 2 | 39 |
Wuhan | 2008 | 30 | 5 | 35 | |
Xi'an | 2011 | 22 | 8 | 30 | |
Suzhou | 2012 | 22 | 2 | 5 | 29 |
Shenyang | 2012 | 14 | 10 | 2 | 26 |
Zhengzhou | 2012 | 21 | 4 | 25 | |
Chengdu | 2011 | 16 | 6 | 22 | |
Changsha | 2014 | 15 | 1 | 16 | |
Jinan | 2014 | 10 | 3 | 13 | |
Hefei | 2016 | 8 | 4 | 12 | |
Fuzhou | 2015 | 11 | 11 | ||
Qingdao | 2014 | 10 | 1 | 11 | |
Taiyuan | 2012 | 9 | 1 | 10 | |
Shijiazhuang | 2014 | 10 | 10 | ||
Nanchang | 2015 | 6 | 6 | ||
Foshan | 2017 | 6 | 6 | ||
Changzhou | 2017 | 5 | 5 | ||
Wuxi | 2015 | 5 | 5 | ||
Ningbo | 2015 | 5 | 5 | ||
# of Small Class Centers
Year | # of | # of | |||
# of | # of Firstleap | One-on- | Total | ||
City | of | ||||
Entry | Peiyou | and Mobby | One | Learning | |
Centers | Centers | ||||
Centers | Centers | ||||
Zhenjiang | 2017 | 4 | 4 | ||
Guiyang | 2016 | 4 | 4 | ||
Dongguan | 2017 | 4 | 4 | ||
Xuzhou | 2017 | 4 | 4 | ||
Lanzhou | 2017 | 4 | 4 | ||
Changchun | 2016 | 3 | 3 | ||
Nantong | 2017 | 3 | 3 | ||
Luoyang | 2015 | 3 | 3 | ||
Wenzhou | 2017 | 3 | 3 | ||
Yangzhou | 2017 | 3 | 3 | ||
Zibo | 2018 | 3 | 3 | ||
Huai'an | 2018 | 3 | 3 | ||
Xiamen | 2017 | 2 | 2 | ||
Dalian | 2017 | 2 | 2 | ||
Yantai | 2017 | 2 | 2 | ||
Huizhou | 2018 | 2 | 2 | ||
Zhongshan | 2017 | 2 | 2 | ||
Shaoxing | 2017 | 2 | 2 | ||
Kunming | 2018 | 2 | 2 | ||
Yinchuan | 2018 | 2 | 2 | ||
Weifang | 2018 | 2 | 2 | ||
Hong Kong | 2019 | 2 | 2 | ||
Langfang | 2019 | 2 | 2 | ||
Yancheng | 2019 | 2 | 2 | ||
Handan | 2018 | 1 | 1 | ||
Nanning | 2018 | 1 | 1 | ||
# of Small Class Centers | ||||||
Year | # of | # of | ||||
# of | # of Firstleap | One-on- | Total | |||
City | of | |||||
Peiyou | and Mobby | One | Learning | |||
Entry | ||||||
Centers | Centers | Centers Centers | ||||
Urumchi | 2018 | 1 | 1 | |||
Haikou | 2018 | 1 | 1 | |||
Ha'erbin | 2018 | 1 | 1 | |||
Hohhot | 2018 | 1 | 1 | |||
Linyi | 2018 | 1 | 1 | |||
Tangshan | 2018 | 1 | 1 | |||
Jining | 2019 | 1 | 1 | |||
Tai'an | 2019 | 1 | 1 | |||
Suqian | 2019 | 1 | 1 | |||
台州 | 2019 | 1 | 1 | |||
Taizhou( | ) | |||||
Jinhua | 2019 | 1 | 1 | |||
Quanzhou | 2019 | 1 | 1 | |||
Taizhou(泰州) | 2019 | 1 | 1 | |||
Jiaxing | 2019 | 1 | 1 | |||
Zaozhuang | 2019 | 1 | 1 | |||
Lianyungang | 2019 | 1 | 1 | |||
Zhangzhou | 2019 | 1 | 1 | |||
Silicon Valley | 2019 | 1 | 1 | |||
Yueyang | 2020 | 1 | 1 | |||
Changde | 2020 | 1 | 1 | |||
Hengyang | 2020 | 1 | 1 | |||
Zhuzhou | 2020 | 1 | 1 | |||
Xiangtan | 2020 | 1 | 1 | |||
Zhanjiang | 2020 | 1 | 1 | |||
Zhuhai | 2020 | 1 | 1 | |||
Jiangmen | 2020 | 1 | 1 | |||
# of Small Class Centers | # of | # of | |||
Year | |||||
# of | # of Firstleap | One-on- | Total | ||
City | of | ||||
Peiyou | and Mobby | One | Learning | ||
Entry | |||||
Centers | Centers | Centers Centers | |||
Shantou | 2020 | 1 | 1 | ||
Xiangyang | 2020 | 1 | 1 | ||
Yichang | 2020 | 1 | 1 | ||
Mianyang | 2020 | 1 | 1 | ||
Deyang | 2020 | 1 | 1 | ||
Wuhu | 2020 | 1 | 1 | ||
Liuzhou | 2020 | 1 | 1 | ||
Zunyi | 2020 | 1 | 1 | ||
Baotou | 2020 | 1 | 1 | ||
Xining | 2020 | 1 | 1 | ||
Baoji | 2020 | 1 | 1 | ||
Baoding | 2020 | 1 | 1 | ||
Xianyang | 2020 | 1 | 1 | ||
Yulin | 2020 | 1 | 1 | ||
Huzhou | 2020 | 1 | 1 | ||
Ganzhou | 2020 | 1 | 1 | ||
Jiujiang | 2020 | 1 | 1 | ||
Chenzhou | 2020 | 1 | 1 | ||
Dongying | 2020 | 1 | 1 | ||
Dezhou | 2020 | 1 | 1 | ||
Heze | 2020 | 1 | 1 | ||
Binzhou | 2020 | 1 | 1 | ||
Maoming | 2020 | 1 | 1 | ||
Jieyang | 2020 | 1 | 1 | ||
Total | 769 | 87 | 134 | 990 | |
Ongoing Progress Since IPO in Fiscal Year 2011
Expanding Scale | Increasing Geographical Footprint | |
# of City Covered | # of Learning Centers | % of Xueersi Peiyou Small Class Revenue Generated Outside Top Five Cities |
+1600% | 102 | +768% | 990 |
6 | 114 | ||
Q3 FY2011 | Q3 FY2021 | Q3 FY2011 | Q3 FY2021 |
(IPO) | (IPO) |
46% | 46% | 48% | |
42% | 43% | 44% | 44% |
Q1 FY2020 Q2 FY2020 Q3 FY2020 Q4 FY2020 Q1 FY2021 Q2 FY2021 Q3 FY2021
Note: Top Five Cities are Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing.
Growth in Revenue / Net Income
US$MM | CAGR:45.7% | $3,273 | +35.0% | |||||||||||||||||||
$2,563 | $1,119 | |||||||||||||||||||||
$829 | ||||||||||||||||||||||
$1,715 | ||||||||||||||||||||||
$620 | $1,043 | |||||||||||||||||||||
$178 | $226 | $314 | $434 | $198 | $367 | |||||||||||||||||
$111 | $117 | $20 | ||||||||||||||||||||
$67 | $103 | |||||||||||||||||||||
$24 | $24 | $33 | $61 | |||||||||||||||||||
($44) | ||||||||||||||||||||||
($110) | ||||||||||||||||||||||
FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY20201Q3 FY2020Q3 FY2021 | |||||||||||||
Revenue | Net Income | |||||||||||||||||||||
Note: Year and period are as per fiscal year.
- Included the partial corrections in relation to "Light Class" business.
Topline Growth Driven by Online and Offline Business
Revenue
US$MM | CAGR:44% | ||||||||||||
3,273 | |||||||||||||
2,563 | YoY: | ||||||||||||
1,715 | +35% | ||||||||||||
620 | 1,043 | 829 | 1,119 | ||||||||||
314 | 434 | ||||||||||||
178 | 226 | ||||||||||||
FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY20201 Q3 FY2020Q3 FY2021 |
Student Enrollments of normal | ||||
priced long-term course | Revenue Contribution | |||
'000s | YoY: +47% | Q3 FY2021 | Q3 FY2020 | |
3,397 | 5% | 6% | ||
2,318 | 28% | 19% | ||
75% | ||||
66% |
Q3 FY2020 | Q3 FY2021 | Small Class and Others | Xueersi.com | One-on-One |
- Included the partial corrections in relation to "Light Class" business.
Ongoing Investments to Increase Future Growth
Gross Profit
US$MM | CAGR:50% | |||||||||||
1399 | 1805 | YoY: | ||||||||||
833 | +29% | |||||||||||
521 | 467 | 604 | ||||||||||
110 | 162 | 231 | 316 | |||||||||
82 | ||||||||||||
FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 1 | Q3 | Q3 | ||
FY2020 | FY2021 | |||||||||||
Margin: | 46.2% | 48.8% | 51.7% | 53.2% | 51.0% | 49.9% | 48.6% | 54.6% | 55.1% | 56.4% | 53.9% |
Operating Income
US$MM
342 | |||||||||||
CAGR:26% | 209 | ||||||||||
137 | |||||||||||
67 | 85 | 135 | 69 | ||||||||
21 | 31 | 57 | |||||||||
-127 | |||||||||||
FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | 1 | Q3 | Q3 |
FY2020 | FY2021 | ||||||||||
Margin: 11.8% | 13.9% | 18.3% | 15.5% | 13.7% | 12.9% | 12.2% | 13.3% | 4.2% | 8.4% | -11.4% |
- Included the partial corrections in relation to "Light Class" business.
While High Visibility Cash Flows Provide Strength to Balance Sheet
Cash, Cash Equivalents, Term Deposits | Deferred Revenues | |||||||||||||||||||||||
and Short-term Investments | ||||||||||||||||||||||||
US$MM | US$MM | |||||||||||||||||||||||
5,098 | 1,957 | |||||||||||||||||||||||
270 | 492 | 479 | 700 | 1,499 | 1,516 | 2,219 | 132 | 178 | 289 | 519 | 842 | 436 | 781 | |||||||||||
199 | 209 | 86 | 103 | |||||||||||||||||||||
Feb 29,Feb 28,Feb 28,Feb 28,Feb 29,Feb 28,Feb 28,Feb 28,Feb 29,Nov 30, | Feb 29,Feb 28,Feb 28,Feb 28,Feb 29,Feb 28,Feb 28,Feb 28,Feb 29,Nov 30, | |||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 20201 | 2020 |
Free Cash Flow
US$MM
856
685
Net Cash Provided by
379 | Operating Activities | |||||||||||||
102 | 148 | 197 | 353 | Capital Expenditure | ||||||||||
73 | 65 | 126 | 194 | 188 | ||||||||||
74 | 7 | 11 | 31 | 35 | 71 | |||||||||
FY20122FY2013 FY2014 FY2015 FY2016 FY20173 FY2018 FY20194 FY2020
- The Group adopted Revenue from Contracts with Customers ("Topic 606") on March 1, 2018. Reclassification was made from deferred revenue to accrued expenses and other current liabilities for tuition collected that may be refunded to the customers in the future if students withdraw from a course for any remaining classes. The Group adopted government policy from the Third Quarter of Fiscal Year 2019 that advanced tuition fees of more than three months may not be collected.
- Capital expenditure in fiscal year 2012 was US$74.3 million. The significant increase was primarily related to the purchase of office space for headquarter in Beijing in the amount of $62.5 million.
- The Group adopted ASU 2016-09 standard on March 1, 2017. The retrospective application resulted in a $9.4 million and $19.5 million reclassification of these cash outflows from operating activities to financing activities on our consolidated statements of cash flows for the years ended February 29, 2016 and February 28, 2017, respectively.
- Capital expenditure in fiscal year 2019 was US$353.3 million. The significant increase was mainly due to prepayments for purchase of land use right of $209.9 million.
Experienced Management Team and Distinguished Board
Bangxin Zhang: CEO and Director since inception
Yunfeng Bai: Chairman since Jan 2020, President since Oct 2016, Senior VP of TAL from Apr 2011 to Oct 2016, 15+ years with TAL
Jane Jie Sun: Audit Committee Chair, Independent Director since Oct 2010, CEO and Director of Ctrip Inc.
Weiru Chen: Compensation Committee Chair, Independent Director since June 2015, associate professor of strategy at China Europe International Business School ("CEIBS")
Kaifu Zhang: Nominating & Corporate Governance Committee Chair, Independent Director since Oct 2016, assistant professor of Marketing and the Xerox Junior Chair at the Tepper School of Business, Carnegie Mellon University
Yachao Liu: COO effective from Jun 2017, Company Director from Oct 2016 to Jan 2020, Senior VP of TAL from Apr 2011 to Oct 2016, 15+ years with TAL
Rong Luo: CFO effective from Nov 1st 2014, former CFO of eLong Inc.
Mi Tian: CTO effective from May 2020, joined TAL in May 2019
Thank You
Address:15/F Danling SOHO, No. 6 Danling Street, Haidian District, Beijing 100080
Email: ir@tal.com
Tel: +8610 5292 6658
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
TAL Education Group published this content on 21 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 January 2021 11:31:05 UTC