EDU: High Expansion Driving Higher Growth in FY2Q18; FY1Q18 is Benefiting From Higher Expansion and Utilization; Maintain Buy Rating
EDU will report FY1Q18 results on Tuesday, October 24th before the markets open with an 8am EST conference call. The company has been conservative in terms of its expansion, but EDU recently changed its approach to one of higher expansion, with high growth in new learning centers and course offerings. Based on our proprietary data, we believe expansion as well as its higher utilization rate is likely to drive high growth in its topline in FY1Q18, but more so in FY2Q18. Consensus for FY1Q18 at $642.3M and FY2Q18 at $426.0M can be conservative. Certainly, the high expansion may cause near term pressure to its margins. As we believe EDU’s fundamentals and outlook are strong, we maintain our Buy rating.