Muddy Waters remain short on TAL Education, below are the slides on Peiyou offline enrollments which appear to be declining.
Q2 hedge fund letters, conference, scoops etc
Peiyou offline enrollments appear to be declining YoY
Peiyou Q3 2018 Disclosures
- Total enrollment YoY +91.7%
- Total revenue YoY +62.4%
- Online ASPs ~40% lower than offline in quarter
- Offline ASPs experienced YoY “high single digit” growth
We use a common-size model to show how this data implies YoY offline enrollment decreases
1. Common Size the Data
2. This Gives Us Two Equations
3. Insert a “High Single Digit” Offline ASP Growth Rate and Solve for e_off
- If g_offASP = 6.0%, then offline enrollment declined 4.5%
- If g_offASP = 7.5%, then offline enrollment declined 9.9%
- If g_offASP = 9.0%, then offline enrollment declined 15.1%
Why Didn’t TAL Disclose Online / Offline ASP Ratio on the Q4 Call?
- We think it’s because our analyst sent a similar version of this model to TAL IR for comment prior to the Q4 call
- We never received a response
- Until that time, our and analyst and IR had been actively dialoguing
Our next report will detail why we believe TAL has fabricated Peiyou results
Article by Muddy Waters
