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www.megastudy.net
Investor Relations2014
ENG14_4Q
www.megastudy.net
2
1. Business Sectors
2. Business Expansion
3. Education System
4. Business Model
5. Offline Infrastructure
6. High Loyalty & Entry Barrier
7. Educational expenditure
8. Growth & Market Size
9. Sales Breakdown
10. 2014 4Q Consolidated Performance
11. 2014 FY Consolidated Performance
12. I/S & B/S Summary
Contents
3
4
5
6
7
8
9
10
11
12
13
14
www.megastudy.net
3
Business Sectors
Megastudy Subsidiaries
▪ High School(on) : www.megastudy.net- provide online lectures for high school students and re-takers
Korean SAT
- Main Contents GPA
Essay & Interview
▪ High School (off) : developing contents / producing contents- running 9 offline schools in Seoul & Near Seoul
Korean SAT
- Main Contents GPA
Essay & Interview
▪ Middle School(on) : www.mbest.co.kr
- provide online lectures on term-based courses
- hiring administrators for each student to communicate their
academic improvement with students and parents by phone
or e-mail
▪ MegaMD (64%) : www.megamd.co.kr / www.megaut.com
- provide lectures for special graduate school entrance exam
(Medical, Dental, Pharmaceutical, and Law)
- provide contents for University transfer exam
(merged with MegaUT, [Jun 1st. 2013],
merged with Il Deung Law School [Mar 9th. 2014] )
▪ IvyKimyoung (46%) : www.kimyoung.co.kr
- provide contents for University transfer exam
▪ MegaFood&Service (60%) - operating food service company for students and employees
▪ MegaBooks (100%) - publishing learning materials and textbook supplementary
▪ HyungsulEdu (100%) - took over offline school in 2009 and currently operating them
just like other offline institutions of Megastudy
▪ SE Global (MegaMD: 67%) www.megacst.com
- provide lectures for police employment test
▪ Resgong (SE Global: 90%) www.rsparta.com- provide English contents for public servant employment test
▪ Megastudy Forever Joint Stock Company (62%) - running offline schools in Hanoi, Vietnam
▪ MegaInvestment (99%) - established investment company, searching for the new growth engine
▪ MegaNext (37%) : www.megahrd.co.kr
- provide job related contents and English contents
▪ Mastern No.3 Mega Project Financing Vehicle (70%) - PFV for the complex building
Megastudy
6 months : KRW 760,000
12 months: KRW 1,280,000
GPA
Special courses for elite-high school
- Price
- Main Contents
www.megastudy.net
4
Business Expansion
High school online
High school offline
Mbest Mbest Merged (Middle school online)
MegaMD
MegaBooks
MegaNext
Megastudy Forever Joint Stock Company
On Off Captive market
Adult & College
MegaMD
(Merged with MegaUT,
Il Deung Law School)
IvyKimyoung, MegaNext
SEGlobal, Resgong
x
High SchoolMegastudy-on Megastudy-off
HyungsulEduMegaBooks
MegaF&SMiddle School Mbest x
Elementary School Mjunior x x
Kindergarten x x x
Overseas
Megastudy
China Ltd
(China)
Megastudy Forever
Joint Stock Company
(Vietnam)x
IvyKimyoung
MegaFood&Service
Horizontal Expanding
MegaUT
Hyungsul Edu
Vertica
l Expanding
Il Deung Law School
MegaInvestment
SEGlobal
2000 2001 20032002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Merged with MagaMD(Jun 1st. 2013)
Merged with MagaMD(Mar 9th. 2014)
2014
Mastern No. 3 Mega PFV
Resgong
www.megastudy.net
5
Education System
■ Education System
- Elementary ……. 6yrs (Age. 8 ~ 13)
- Middle School…. 3yrs (Age.14 ~ 16)
- High School……. 3yrs (Age.16 ~ 19)
- Undergraduate School
- Graduate School
Re-takers
UniversityHigh School Applying for University
▪ Re-takers : students who wish to take KSAT exam once more
2 WAYS
■ University Entrance Exam
KSAT- National standardize examination
- Once a year (3rd week of Nov.)
GPA - Academic performance records in high school
University
Specific
Requirement
- Essay writing style
- Interview
- Knowledge based test
▪ Early Application : GPA + KSAT + University Specific Requirement
(Essay writing / Interview / Language, Math, Science expertise, etc)
▪ Regular Application : GPA + KSAT + University Specific Requirement
(Essay writing / Interview)
www.megastudy.net
6
Business Model
■ Megastudy Offline ■ Megastudy Online
- Single subject class
- 2~3 months (1,000 min.)
- 10 ~ 15 Chapters
- VOD type service
Filming
Editing
Uploading
■ Lecturers
▪ No. of lecturers in high school offline & online
■ Virtuous Cycle
Increase traffic
Tighten up
on keen competition
Outcome of
superb contents
Increase trafficIncrease traffic
Tighten up
on keen competition
Tighten up
on keen competition
Outcome of
superb contents
Tighten up
on keen
competition
Tighten up
on keen
competition
On : 23%
Off : 50%
On : 23%
Off : 50%
\ 190,000 \ 65,000
- Single subject class
- 2 months (8weeks)
- 2~3hrs / week
- 16 ~20 hrs
▪ Contract with lecturers on the commission basis
Outcome of
superb
contents
Outcome of
superb
contents
1/3
Offline
(373)
Popular lectures
Expert lecturers
Popular lectures
Expert lecturersOnline
(95)
www.megastudy.net
7
Offline Infrastructure
Seoul
Yangji boarding school
Seocho Megastudy
Shinchon Megastudy
Kangbook MegastudyNorayngjin Megastudy
Gwangju boarding school
Namyangju boarding school
Kangnam Megastudy
▪ Launched in 2003▪ High school & Re-takers
▪ Single Subject Class1)
: 10,000
▪ Re-takers Class2): 1,100
▪ Launched in 2006▪ Re-takers▪ Capacity : 170
▪ Launched in 2004▪ High school & Re-takers
▪ Single Subject Class1)
: 18,000
▪ Re-takers Class2): 1,150
▪ Launched in 2008▪ Re-takers▪ Capacity : 470
▪ Launched in 2008▪ High school & Re-takers
▪ Single Subject Class1): 3,500
▪ Re-takers Class2): 920
▪ Launched in 2005▪ High school & Re-takers
▪ Single Subject Class1)
: 30,000
▪ Re-takers Class2): 880
▪ Launched in 2004▪ High school & Re-takers
▪ Re-takers Class2): 920
▪ Launched in 2010▪ Re-takers▪ Capacity : 1,000
▪ Launched in 2011▪ High school & Re-takers
▪ Re-takers Class2): 600
Pyungchon school
Notes
1) Annual number of courses (“tickets”) sold
2) Number of students taught (“capacity”) at each offline facility
www.megastudy.net
8
High Loyalty & Entry Barrier
■ Target marketing
- 5 ~ 6 times per year
- College admission convention
- generated educational culture
- giving out the useful information
about the University admission
(eg. Scoring service, College
application service, etc.)
■ High Entry Barrier
Membership
Offline
institution
Contents
(Lectures)
- Tighten up on the keen competition among offline lecturers
produce outcome of superb contents
- Offline institution is the place where the high quality of
contents can be produced
www.megastudy.net
9
Educational expenditure
■ Education expenditure of householder■ Education expenditure of OECD countries
▪ Spending by households on total education and private education rose by 7.1% and 12.0% p.a respectively for past 10 years.
< % of GDP >
3.1
2.1
0.5
1.3
0.7 0.8
1.7
0.9
4.9
5.3
5.8
4.8
5.3
4.5
5.0 5.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
KOREA US France Canada UK Germany Japan OECD
Avg.
Public
Private
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08
Private Education
Public Education
% of Education
(%)(miilion won)
www.megastudy.net
10
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013
8.7bn
21.7bn
33.3bn
47.0bn
58.4bn
Growth & Market Size
■ Special graduate school entrance exam market
■ University transfer entrance exam market
< Sales Trend of MegaMD>
▪MegaMD is recording notable achievement and generated 58.4bn KRW
sales based on the successful performances in four different
business profit centers.
- Megastudy invested 4.3bn in 2010 to acquire “High Top” company to expand business into University transfer entrance exam market and renamed that company to MegaUT.
- In addition, Megastudy completed IvyKimyoung’s acquisition in June of 2011 to be attained the dominant player within a short period of time in UT market.
- IvyKimyoung company was known as no.1 education company in University transfer exam education market.
- Total acquisition price was 18.7 bn won.- Total equity holding of IvyKimyoung is approximately 78%.
▪Megastudy 46 %▪MegaMD 12 %▪Mgmt. of MegaMD & Megastudy 20 %
- Jun 1st. 2013, MegaUT merged with MegaMD- Mar 9th. 2014, Il Deung Law School merged with MegaMD
PEET
51.0 bn
MEET/DEET
31.0 bn
LEET
8.0 bn
MegaMD’s
M/S : 65%
MegaMD & Il Deung Law School’s
M/S : 90%
< 2013 total number of student recruiting >
(billion won)
OrdinaryBachelor's
degreeTotal
Regular 4,506 1,818 6,324
Fine Arts 713 507 778
Medical/Dental
Oriental/Veterinary148 - 148
Total 5,367 2,325 7,692
MegaMD’s
M/S : 50%
▪ Total size of special graduate entrance exam
market is estimated by 90.0 bn KRW
www.megastudy.net
11
Sales Breakdown
Megastudy
Subsidiaries
Megastudy
2010 2011 2012 2013 2014
85.1%
14.9%
25.4%
74.6%
33.3%
66.7%
38.1%
61.9%
40.0%
60.0%
Unit : Billion Won 2010 2011 2012 2013 2014
Megastudy 245.0 263.1 226.7 202.9 202.8
Subsidiaries 42.9 89.6 113.0 126.6 135.1
MegaMD 21.4 33.3 47.0 58.4 61.8
MegaUT - 3.9 3.9 1.3 -
IvyKimyoung - 21.2 29.4 23.8 22.3
MegaBooks 12.7 12.0 11.6 19.7 26.9
MegaFood&Service 0.1 12.3 16.3 17.9 19.2
SEGlobal - - - 0.9 2.8
ILDeung Lawschool 1.8 2.4 2.0 2.6 0
HyungsulEdu 4.2 3.2 2.5 1.4 0.7
M.F.J.S.C(Vietnam) 0.1 0.2 0.3 0.4 0.4
MegaInvestment - - - 0.2 0.8
MegaNext 2.6 1.1 - - -
Resgong 0.2
Internal Transaction -4.4 -9.0 -11.7 -12.6 -13.4
Total 283.5 343.7 327.9 316.8 324.5
www.megastudy.net
12
13 4Q 14 4Q YoY
Sales OP OPM Sales OP OPM Sales OP
Consolidate 58.6 -4.0 -6.8% 61.8 -5.8 -9.3% 5.5% -44.8%
Megastudy 35.2 -1.4 -4.0% 36.6 -3.5 -9.6% 3.8% -147.7%
Subsidiaries 25.4 -2.5 -9.7% 27.6 -2.1 -7.7% 8.8% 13.0%
MegaMD 8.2 -3.5 -43.4% 9.7 -2.2 -22.8% 18.9% Deficit
MegaUT - - - - - - - -
IvyKimyoung 7.0 1.3 19.2% 6.6 0.8 11.5% -4.9% -42.8%
MegaBooks 7.0 0.8 11.2% 7.5 0.5 7.1% 7.1% -32.1%
MegaFood&Service 2.4 -0.1 -2.7% 2.7 -0.1 -5.2% 12.3% Deficit
SEGlobal 0.3 -0.3 -103.7% 0.7 -0.3 -40.7% 110.7% Deficit
IldeungLawschool 0.2 -0.2 -136.6% - - - -100.0% -100.0%
HyungsulEdu 0.1 -0.1 -87.1% 0 -0.2 -551.8% -71.0% Deficit
M.F.J.S.C(Vietnam1) 0.1 -0 -57.3% 0.1 -0 -38.1% 23.4% Deficit
Plus Edu(Vietnam2) 0 -0 -193.5% - - - -100.0% -100.0%
MegaInvestment 0.2 -0.1 -63.6% 0.2 -0.2 -90.2% 18.9% Deficit
M.A.V. Fund No.1 - -0.1 - - -0.1 - - Deficit
Mastern No.3 Mega PEV - - - - -0.1 - - Deficit
Resgong - - - 0.1 -0.1 -151.7% - Deficit
Internal Transaction -2.1 -0.1 -2.4 -0.1
2014 4Q Consolidated Performance
Unit : billion won
* Online revenue is recognized on the basis of stage of completion of services.
www.megastudy.net
13
13 FY 14 FY YoY
Sales OP OPM Sales OP OPM Sales OP
Consolidate 316.8 50.2 15.8% 324.5 46.9 14.4% 2.4% -6.6%
Megastudy 202.9 38.4 18.9% 202.8 35.9 17.7% -0.1% -6.3%
Subsidiaries 126.6 122.2 9.7% 135.1 11.4 8.4% 6.8% -7.2%
MegaMD 58.3 10.8 18.5% 61.8 8.2 13.2% 5.9% -24.1%
MegaUT 1.3 -0.3 -22.5% - - - -100.0% -100.0%
IvyKimyoung 23.8 0.4 1.9% 22.3 0.8 3.4% -6.1% 67.6%
MegaBooks 19.7 1.4 7.2% 26.9 3.0 11.1% 36.6% 111.3%
MegaFood&Service 17.9 2.5 13.8% 19.2 2.3 12.1% 7.1% -6.6%
SEGlobal 0.9 -1.6 -183.7% 2.8 -0.6 -21.8% 223.2% Deficit
IldeungLawschool 2.6 0.3 13.7% 0 -0.2 -733.3% -99.2% Deficit
HyungsulEdu 1.5 -0.2 -15.0% 0.7 -0.4 -54.3% -54.5% Deficit
M.F.J.S.C(Vietnam1) 0.4 -0.2 -68.1% 0.4 -0.2 -43.2% 9.8% Deficit
Plus Edu(Vietnam2) 0 -0.1 -124.5% - - - -100.0% -100.0%
MegaInvestment 0.2 -0.7 -282.6% 0.8 -0.5 -60.7% 219.6% Deficit
M.A.V. Fund No.1 - -0.1 - - -0.4 - - Deficit
Mastern No.3 Mega PEV - - - - -0.5 - - Deficit
Resgong - - - 0.2 -0.3 -122.8% - Deficit
Internal Transaction -12.6 -0.4 -13.4 -0.4
2014 FY Consolidated Performance
Unit : billion won
* Online revenue is recognized on the basis of stage of completion of services.
www.megastudy.net
14
Consolidated I/S & B/S Summary
Unit : billion won
2013 2014 YOY
Sales 316.8 324.5 2.4%
COGS 124.7 129.2 3.6%
S&A expense 141.9 148.4 4.6%
Operating Profit 50.2 46.9 -6.6%
OPm (%) 15.8% 14.4%
Financial Income 7.7 12.9 68.6%
Financial Exp. 0.5 0.8 58.5%
G/L on Investment of
Subsidiaries -1.3 -1.9 48.9%
Other Operating Income 0.9 2.3 164.7%
Other Operating Exp. 2.3 4.7 101.5%
Profit before tax 54.6 54.6 0.1%
Income tax expense 13.3 14.5 8.8%
Net Profit 41.2 40.1 -2.7%
NPm (%) 13.0% 12.4%
Profit, attributable to owners
of parent36.3 39.1 7.9%
Margin (%) 11.5% 12.1%
Unit : billion won
2013 2014
Total Assets 486.7 574.7
Current assets 188.7 280.8
Non-Current assets 298.1 293.8
Total Liabilities 94.0 151.8
Current Liabilities 79.9 78.8
Non-Current Liabilities 14.2 73.1
Total Shareholder's Equity 392.7 422.8
Paid-in capital 3.2 3.2
Capital Surplus 7.7 7.9
Capital Adjustment -0.2 1.2
Retained Earnings 364.9 390.1
Non-Controlling S/H 17.2 20.5
Total Liabilities &
Shareholder’s Equity486.7 574.7
▪ Consolidated B/S▪ Consolidated I/S