[ET Net News Agency, 25 January 2021] Daiwa Research lowered its target price for
Koolearn Technology (01797) to HK$31 from HK$35 and reiterated its "outperform" rating.
The research house noted that Koolearn posted soft 1H FY2021 top-line growth of 19% due
to weak performances by its college education and institutional segments. Its K12 business
continued to be the market focus and posted 163% revenue growth, exceeding Daiwa's
expectation by 10%.
Daiwa believes Koolearn has been disciplined in acquiring new students through
diversified channels and the growth in enrolments is unlikely to be disrupted by the
potential tightening of the regulatory scrutiny in the near term.
It believes the dual-engine model for the K12 business will bolster the segment revenue
growth to 200% in FY2021. It forecasted the losses to narrow only from FY2022 and its
breakeven point will further be pushed back. (KL)