NEW YORK, March 08, 2024 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has released an Update Note on QuantaSing Group Limited (NASDAQ: QSG). The update note includes information on QuantaSing’s financial results, management commentary, recent developments, outlook, risks, and our revised valuation estimates.
The update note is available here. Highlights from the report include:
- Robust Q2 FY2024 Financial Performance - QuantaSing showcased robust financial performance in the second quarter of FY 2024, posting a significant 24.7% year-over-year increase in revenues to RMB980.5 million ($138.1 million). Moreover, the Q2 topline also grew 12.8% q-o-q while surpassing our estimate of RMB927.05 million. This growth was primarily fueled by substantial gains in skill upgrading courses, alongside noteworthy advances in recreation and leisure courses partially offset by a decrease in revenues from financial literacy courses. Notably, the revenues from ancillary business lines rose markedly, registering RMB49.3 million (US$7.0 million) in the second quarter of FY 2024, up from a modest RMB0.1 million in the same quarter of the previous fiscal year. This substantial growth primarily stems from the company's recent foray into live e-commerce, reflecting its strategic focus on diversifying income sources. Operational efficiency, as evidenced by improving margins, was primarily contributed by a slight y-o-y growth in sales and marketing, a decline in general and administrative expenses, as well as research and development expenses, hinting at effective cost management and an optimized operational model. Importantly, the sharp pivot from a net loss in the previous year to a net income of RMB107.6 million in this quarter is highly indicative of QuantaSing's fiscal prudence and its path towards a scalable and profitable business.
- Q2 FY2024 Key Operational Updates - QuantaSing demonstrated robust financial and operational growth in Q2 FY 2024, with gross billings for individual online learning services surging by 24.0% sequentially and 15.4% year-over-year to RMB944.6 million. The company’s strategic focus on diversifying course offerings, particularly targeting the underserved senior learner segment, has paid off, contributing to a significant 44.6% increase in registered users to 112.4 million and a 24.2% rise in paying learners to 0.4 million. This strong operational growth is supported by QuantaSing’s adaptability and innovation in the online education sector. The company has also initiated its foray into the AI and technology sector, aiming to capitalize on its technological capabilities within the online learning domain. This new business line is dedicated to exploring and harnessing AI technologies and related areas, seeking opportunities for integration and synergy with its existing tech infrastructure.
- QuantaSing Introduces YUNTING, Elevating Chinese New Year Spirits – QuantaSing recently ventured into the Baijiu industry by launching YUNTING, a premium Baijiu brand, marking a significant diversification into the private label business. This strategic expansion follows its successful foray into live-streaming e-commerce in June 2023, which has become a cornerstone of its growth strategy. YUNTING, crafted in the renowned Maotai town and featuring the "sauce aroma" profile, is brewed using fine sorghum, wheat, and water, applying ancient 12897-step fermentation, distillation, and aging techniques and craftsmanship, resulting in an incredibly rich and smooth character. This meticulous production method has earned YUNTING a government quality certificate, underscoring its high quality. By capitalizing on the Chinese New Year's increased demand for premium spirits and leveraging its robust online platform, QuantaSing aims to strengthen brand loyalty and consumer engagement and targets new revenue streams within the competitive Baijiu and e-commerce markets.
- Valuation - In line with the sustained growth momentum and significant improvement in profitability, we have revised our revenue and profit margin estimates. These revisions, along with the update of the cash balance and reassessment of the comparable company analysis, have yielded a valuation of $11.72 per share. This valuation is predicated on the company's successful execution of its strategic plan.
About QuantaSing Group Limited
QuantaSing Group Limited, founded in 2019 and based in Beijing, offers a variety of online courses for adult learners and enterprises services in China. Their educational brands include QiNiu, JiangZhen and, QianChi. For more information, visit https://ir.quantasing.com/
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by QuantaSing Group Limited for producing research materials regarding QuantaSing Group Limited, and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however, the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for an annual or semi-annual research engagement. As of 03/08/2024, the issuer had paid us $60,000 for our company sponsored research services for coverage in English and Mandarin, which commenced 08/09/2023 and is billed annually. Diamond Equity Research LLC may be compensated for non-research related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has paid us for non-research related services as of 03/08/2024 consisting of $3,000 for presenting at virtual investor conference. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for QuantaSing Group Limited.
Contact:
Diamond Equity Research
research@diamondequityresearch.com
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