: April 2016 saw a bullish engulfing formation following a series of Doji’s
Most recent support: The stock saw heavy rejection at the $47 level (late March) indicating support in this area. Since then price has been pushing higher, and is currently making a series of higher lows
and the trend of lower weekly highs has also been breached.
Stochastic Oscillators: The weekly MACD continues to trade in a positive manner.
Moving averages: The stock is trading above both its 200- and 50-day simple moving averages.
Volume: Recent trading has seen volume marginally below the stocks average (594,000 on the 50-day, 626,000 for the 200-day)
Anchor industry/company drivers:
Medium term: The company is working on expanding its online offerings and is increasing its bricks and mortar presence as well.
Longer term: Our research suggests that a significant percentage of Asia-Pacific households utilise educational classes outside of school hours.
Growth: The Chinese population is expected to reach some 1.4 billion people by 2020 with the last census (2011) indicating some 16.6% were aged 0-14 years.
Recent results: TAL posted a positive set of year-end figures with revenues ahead by 42.1% (year-over-year) and net attributable income higher by 53.2%. TAL saw a 54.6% increase in student enrolments to 2.3m and an increased footprint of 363 learning centres in 25 cities (previously 289 in 19 cities for 2015).
Sales development: Trending higher plus 42.1%.
Net Income from operations: 26.5%.
Standalone valuation: Altman-Z score of 5.56 implying a reasonably solid financial base.
Competitor/industry valuation: Trades at a premium to its peers on a number of forward metrics
Net income per ADS attributable to TAL: plus 51.5% as at year-end cash and cash equivalents stood at $434m ($470m FY2015)
Outlook: For Q1 management are expecting revenues of between $181.1m and $183.2m (an increase of some 40% to 42% y/y).
TAL is due to report Q1 results late July, date T.B.A.
Entry: For breakout buyers (B), we would highlight $60 (late April 2016 highs).
For pullback buyers (P), we would highlight $47 with a lower level at $45.
Stop: a hard stop on a break of $43.
Targets: $65 then $70.
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Source: Saxo Bank
— Edited by Michael McKenna
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