51Talk Online Education Group (NYSE: COE)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001659494
Market Cap 158.33 Mn
P/B -6.62
P/E -14.87
P/S 1.95
ROIC (Qtr) 51.38
Div Yield % 0.00
Rev 1y % (Qtr) 87.47
Total Debt (Qtr) 3.31 Mn
Debt/Equity (Qtr) -0.14
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About

51Talk Online Education Group, also known as 51Talk, is a company that operates in the online education industry, with a focus on language education, specifically English and Chinese. The company was established in 2011 and has its headquarters in the Cayman Islands. 51Talk's mission is to make quality education accessible and affordable to students worldwide. 51Talk's main business activities revolve around its proprietary online and mobile education platforms, which connect students with a large pool of highly qualified English and Chinese tutors....

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Investment thesis

Bull case

  • Healthy cash reserves of 36.62M provide 23.30x coverage of short-term debt 1.57M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 64.80M provides 19.59x coverage of total debt 3.31M, indicating robust asset backing and low credit risk.
  • Cash reserves of 36.62M provide comfortable 26.58x coverage of tax obligations 1.38M, showing strong fiscal management.
  • Strong tangible asset base of 64.80M provides 912.61x coverage of intangibles 71000, indicating robust asset quality.

Bear case

  • Investment activities of 0 provide weak support for R&D spending of 4.79M, which is 0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 0 provides insufficient coverage of deferred revenue obligations of 70.71M, which is 0x, raising concerns about future service delivery capabilities.
  • R&D investment of 4.79M represents just 0.07x of SG&A expenses of 65.38M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Operating cash flow of 0 provides minimal 0x coverage of tax expenses of 752000, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Tax assets of 56000 provide limited offset against tax liabilities of 1.38M, which is 0.04x, indicating potential future cash flow pressure from tax obligations.

Counterparty Name Breakdown of Revenue (2020)

Counterparty Name Breakdown of Revenue (2020)

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.06 0.71
EV to Cash from Ops. EV/CFO 22.96 6.80
EV to Debt EV to Debt 40.49 11.15
EV to EBIT EV/EBIT -13.53 112.78
EV to EBITDA EV/EBITDA -16.93 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 24.24 5.57
EV to Market Cap EV to Market Cap 0.85 582,173.64
EV to Revenue EV/Rev 1.65 1.74
Price to Book Value [P/B] P/B -6.62 -3.80
Price to Earnings [P/E] P/E -14.87 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.69
Interest Coverage Int. cover (Qtr) 0.00 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 42.94 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.58 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 11.93 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 11.93 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 0.00 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 87.84 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.25 0.63
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.42 0.73
Current Ratio Curr Ratio (Qtr) 0.68 1.63
Debt to Equity Ratio Debt/Equity (Qtr) -0.14 3.83
Interest Cover Ratio Int Coverage (Qtr) 0.00 53.05
Times Interest Earned Times Interest Earned (Qtr) 0.00 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) -12.19 -82.13
EBT Margin % EBT Margin % (Qtr) -12.19 -47.07
Gross Margin % Gross Margin % (Qtr) 75.30 50.48
Net Profit Margin % Net Margin % (Qtr) -13.10 -48.61