Sunlands Technology Group (NYSE: STG)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001723935
Market Cap 59.33 Mn
P/B 0.46
P/E 1.10
P/S 0.21
ROIC (Qtr) 232.56
Div Yield % 0.00
Rev 1y % (Qtr) 6.47
Total Debt (Qtr) 19.24 Mn
Debt/Equity (Qtr) 0.15
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About

Sunlands Technology Group, a leading online education company in China, operates under the ticker symbol STG on the New York Stock Exchange. The company is renowned for providing adult online education and adult personal interest learning courses to students in China and beyond. Established in 2003, Sunlands Technology Group transitioned to an online education model in 2014, leveraging technology and innovation to transform the learning experiences of its students. The company's operations span across various regions in China, with a wide range...

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Investment thesis

Bull case

  • Healthy cash reserves of 84.41M provide 63.03x coverage of short-term debt 1.34M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 298.39M provides 15.51x coverage of total debt 19.24M, indicating robust asset backing and low credit risk.
  • Robust tangible asset base of 298.39M provides 33.36x coverage of working capital 8.94M, indicating strong operational backing.
  • Long-term investments of 46.72M provide solid 2.61x coverage of long-term debt 17.90M, indicating strategic financial planning.
  • Cash reserves of 84.41M provide comfortable 175.82x coverage of tax obligations 480056.18, showing strong fiscal management.

Bear case

  • Investment activities of 0 provide weak support for R&D spending of 3.70M, 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 97.68M, which is 0x, raising concerns about future service delivery capabilities.
  • Retained earnings of (212.50M) provide limited buffer against comprehensive income items of 18.21M, which is -11.67x, indicating elevated exposure to market risks.
  • R&D investment of 3.70M represents just 0.02x of SG&A expenses of 187.23M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Short-term investments of 24.79M represent 2.77x of working capital 8.94M, suggesting potentially excessive financial asset allocation versus operational needs.

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 -0.14 0.71
EV to Cash from Ops. EV/CFO -1.56 6.80
EV to Debt EV to Debt -2.17 11.15
EV to EBIT EV/EBIT -0.67 112.78
EV to EBITDA EV/EBITDA -0.88 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF -1.56 5.57
EV to Market Cap EV to Market Cap -0.70 582,173.64
EV to Revenue EV/Rev -0.15 1.74
Price to Book Value [P/B] P/B 0.46 -3.80
Price to Earnings [P/E] P/E 1.10 -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 Dividend Payout Ratio % 0.00 1.69
Interest Coverage Int. cover (Qtr) 285.16 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 12.14 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -13.25 -39.04
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) -3.50 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) -2.53 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) -10.92 -29.51
FCF Growth (1y) % FCF Growth (1y) % 0.00 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.60 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.13 0.63
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.72 0.73
Current Ratio Curr Ratio (Qtr) 1.08 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.15 3.83
Interest Cover Ratio Int Coverage (Qtr) 285.16 53.05
Times Interest Earned Times Interest Earned (Qtr) 285.16 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) 154.99 -82.13
EBT Margin % EBT Margin % (Qtr) 21.69 -47.07
Gross Margin % Gross Margin % (Qtr) 86.00 50.48
Net Profit Margin % Net Margin % (Qtr) 18.90 -48.61