The writer is an analyst with NH Funding & Securities. He might be contacted at firstname.lastname@example.org. — Ed.
Due to IB Kimyoung for reserving regular earnings in Faculty Switch Division for: 1) Improve within the variety of switch slots in Police Faculty and Pharmacy and Medical Schools for the 2023 educational yr; and a pair of) a rise within the variety of schools adopting ‘switch’ English exams. That mentioned, relative to different house schooling shares, IB Kimong shares require gross sales restoration within the employment division and affirmation of earnings pushed by efficient value controls to justify their elevated valuations.
Police Faculty will recruit 50% college students by switch admission
We anticipate additional enlargement within the variety of school switch admissions going ahead. From the 2023 educational yr, Police Faculty is to enroll 50% of incoming college students by switch admission, and the acceptance price for subsequent yr’s switch enrollment is 30.3:1 (versus 52:1 for normal school candidates). . In the meantime, schools of pharmacy have switched to a unified six-year system on the abolition of Pharmacy Training Eligibility Check (PEET) from the 2022 educational yr, permitting switch of third-year college students by widespread switch exams. Furthermore, many of the medical and dental graduate colleges, which earlier chosen graduate college students on the premise of Medical Dental Training Eligibility Check (MDEET) scores, at the moment are changing to medical or dental schools, hoping to speed up the switch to the medical discipline. hopefully.
Moreover, we level out that many top-15 schools and universities positioned in Seoul now require switch admission candidates to take a ‘switch’ English take a look at (targeted on candidates’ studying comprehension in-house- developed English take a look at). The variety of standardized English exams, and thus the pattern, must be helpful to IB Kimong, a serious participant within the Korean school switch examination schooling market (as much as 80% market share).
2H22 Outlook: Value management will likely be key to revenue in employment schooling division
In 2Q22, yy gross sales progress within the Faculty Switch and Employment Training divisions slowed to the respective +8% and +2% because of the unfold of the Omicron model. We anticipate that these divisions may also ebook mid-single-digit gross sales progress in 3Q22.
Accordingly, we revise our 2022E (consolidated) gross sales and OP forecasts to the respective W85.4bn (+7% yy) and W3.7bn (-53% yy) to replicate: 1) the slow-down in employment schooling. than-required restoration (pc, magnificence) division; and a pair of) the burden of upper spending for recruitment and infrastructure investments for brand new companies.
Buying and selling on the respective 2022E and 2023F P/E of 28x and 25x (September 21, W2,160), IB Kimyoung shares look overvalued amongst home schooling shares (common 2022E P/E 8x). Efficient value management have to be mandatory to substantiate earnings progress pushed by gross sales realization within the employment division and justify such excessive valuations.