일산토익과외
profit lies Operating leverage ahead? Less cyclical revenue streams Educomp Solutions - BUY Indian education 14 March 2008 bhavtosh.vajpayee@clsa.com 69 towns 일산 토익 mapped already in India (25 more to go), this investment is also expected to even out over the next 12 months. Improved utilisation of school infrastructure and greater licensing revenue streams as Smart Class penetrates Southeast Asian markets 일산 토익 provides further opportunities to defend and expand profitability. Educomp has the strongest portfolio in Indian education 0 10 20 30 40 50 60 70 80 90 1 10 100 1,000 10,000 100,000 Market size (US$m) K12 school management Multimedia in private schools IT in public schools Pre-schools Tutoring, private professional 일산 토익colleges: future optionality Books E-Learning Teacher training (% Cagr, next 5 years) Source: CLSA Asia-Pacific Markets Our target price of Rs7,000 is based on a DCF valuation. Educomp’s 43x FY09 valuation looks expensive (although lower than Everonn), but needs to be seen in the context of its 93% EPS Cagr until FY11. Moreover, 일산 토익 we note that while education has been an increasingly active investment play worldwide, only select stocks have delivered consistent returns over the years. Raffles in Singapore, Devry in the US and MegaStudy in Korea are some examples of stocks that have done remarkably better than their peers. While Indian education’s opportunities are immense, the positioning of its publicly-listed players across market segments are not entirely optimal. Educomp is the exception. DCF ranges for Educomp WACC 12.0% 12.5% 13.0% 13.5% 14.0% 14.5% 15.0% 15.5% 16.0% 3.0% 7,391 6,786 6,258 5,793 5,382 5,017 4,690 4,398 4,134 3.5% 7,643 6,995 6,432 5,939 5,505 5,121 4,779 4,473 4,199 4.0% 7,926 7,228 6,625 6,100 5,640 5,235 4,876 4,556 4,269 4.5% 8,247 7,490 6,841 6,279 5,789 5,360 4,981 4,645 4,345 5.0% 8,614 7,780 7,084 6,479 5,956 5,499 5,098 4,743 4,429 5.5% 9,037 8,127 7,359 6,704 6,141 5,653 5,226 4,851 4,520 6.0% 9,531 8,519 7,674 6,960 6,350 5,825 5,369 4,971 4,620 Terminal growth 6.5% 10,115 8,977 8,037 7,251 6,587 6,019 5,529 5,103 4,731 S