1.做空报告写的都是增值收益和投资收益，不影响经营利润
2.利润率过高？去年经调整op margin15%,新东方25%，一般学校20%，好未来虚增利润的可能性不大
3.收入增长？并表的收入并表不到1%，收入很难做假
之前估值过高已经到目标价而下调评级，但昨天超跌，是买入机会
[CICC Education] First take on Muddy Water's attack on TAL -- nothing related with fundamental
Muddy water published a 71-page short report on TAL, accusing its profit being overstated, using M&A instruments, like Shunshun & Qingqing;
We think MW’s making a mistake here, and neglecting what the market really cares about, at least in the info conveyed in the published Part 1 report.
1) TAL’s Non-GAAP OPM in FY18 only 15%, much lower than industry level, (compared with EDU’s ~25% for K12 business and other regional players’ ~20%) esp. given its conservative attitude in S&M investments in the past years ( turned more aggressive to promote online business since FY19).
2) MW accusing SS & QQ related investment gains & deferred revenue, while market focus mainly on offline K12 small class and online endeavor development. SS only accounts for ~1% of the topline and QQ not consolidated yet. And also, those related gains, only recorded as below the line items, no impact for operating income, which the market cares the most.
The 71-P report basically touched only the investment related stuff rather than core business; see if any further info to be provided in the following reports. BUY into dips though we’ve downgraded the stock on valuation two weeks ago, TP unchanged at $45.