[IPO Broadcast] Together Education Technology, China's leading K12 online work platform

According to the latest prospectus disclosure,The pricing range for the current IPO of One Education Technology is 9.5 to 11.5 US dollars/ADS, it is proposed to issue a total of 27.4 million ADS shares (excluding over-allotment rights). Based on this calculation, the corresponding financing scale range is 260 million to 315 million US dollars.

Established in 2011, Together Education Technology (formerly Together) is a well-known K12 online homework platform in China. It is also an intelligent education company that provides “Internet +” solutions for basic education. Currently, the company's brand business includes: elementary school together, high school together, study together, study online school together.

The total number of users exceeds 100 million, and the advantages of segmentation are obvious

According to the prospectus, the Together Education Technology brand Work Together provides services to more than 900,000 teachers, 54.3 million students, and 45.2 million parents nationwide, covering one-third of the country's public primary and secondary schools.

According to the Frost & Sullivan report, the average MAU (monthly active users) of Work Together (a brand owned by Education Technology) in the first half of 2020 was number one in the field of online work in primary and secondary schools. The scale was larger than the sum of the following four companies, and the superior position was obvious. At the same time, based on the number of H1 payers in 2019 and 2020 and the total number of orders, the company is the top 5 extracurricular online education service provider in China.

Focus on R&D investment and build technical barriers

One Education Technology's R&D expenses in 2019 exceeded 491 million yuan, an increase of 23.24% over the previous year, accounting for 35.86%. As of the third quarter of 2020, the company's R&D expenses were 423 million yuan, an increase of 16.54% over the previous year. The share of R&D far exceeds that of peers, and it is expected that the company's R&D expenses will continue to grow.

Continuously increasing investment in R&D is conducive to providing strong technical support for products in the future, and also establishes a moat for the company in industry competition.

Revenue growth rate exceeds 277.48%

According to the prospectus, the net revenue of One Education Technology in 2019 was 406 million, an increase of 30.75% over the previous year. The net revenue of Education Technology in the nine months ended September 30, 2020 was 808 million yuan, an increase of 277.48% over the previous year. However, due to high R&D and sales expenses, the company is currently still in a state of loss.

Luxury shareholder camp

According to public information, in the nine years since its establishment, Together Education Technology has carried out multiple rounds of financing, and has been favored by well-known investment institutions such as Xu Xiaoping's Zhenge Fund, Lei Jun's Shunwei Capital, Tiger Fund, H Capital, Temasek, DST, and CITIC Industrial Fund. Of these, Shunshi Capital holds 20.2% of the shares and is the largest shareholder.

In the post-pandemic era, the online education market has huge potential

In the post-pandemic era, the role of online education has become more prominent, and the scale of the online K12 after-school tutoring market in China continues to expand. The total number of students in China's online K12 after-school tutoring market increased from 2.9 million in 2015 to 30.3 million in 2019, and is expected to increase to 95.7 million by 2024.

Meanwhile, the total revenue of the online K12 after-school tutoring market in China increased from 3.2 billion yuan in 2015 to 67 billion yuan in 2019, with a compound annual growth rate of 358%. It is expected to increase to 407.2 billion yuan by 2024, with a compound annual growth rate of 147% during this period.
Since this year, online education stocks have performed brilliantly. Most Chinese online education companies in the US stock market have recorded impressive performance. As of the close of November 25, EST, the increase from the beginning of the year to date was 185%, and NetEase YouDao's increase was 112.93%. Good Future and New Oriental have also achieved increases of 53.22% and 39.22% respectively.

Meanwhile, Hong Eun Education, an online education company listed on the New York Stock Exchange on October 9, initially closed up 33%. By the close of trading on November 25, there had been a cumulative increase of 139%.

Hong Eun Education mainly targets the education of children aged 3-8. In contrast, an education technology track focusing on K12 intelligent education is broader, and the market prospects are worth looking forward to.