TAL: Margins Are Likely To Improve Going Forward As A Result of Ramping Up Of Recently Added Centers; Expect Strong FY2Q18 Top Line; Maintain BUY Rating

  • TAL: Margins Are Likely To Improve Going Forward As A Result of Ramping Up Of Recently Added Centers; Expect Strong FY2Q18 Top Line; Maintain BUY Rating

TAL will report FY2Q18 results before the market opens on Thursday, October 26, 2017 with an 8:00AM EST conference call. Starting from FY3Q18, we are going to see slower expansion, but TAL will offer more high-price offerings. The company is modifying its high speed expansion to moderate expansion in physical locations. At the same time TAL has increased the quantity of higher price class offerings, which will contribute to top line growth going forward. We believe such changes are also positive to its margins. As for FY2Q18, based on our proprietary data, the topline is likely to outperform consensus expectation driven by strong growth in total class offerings and attendees. We maintain our BUY rating.

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