##{"id":86940,"date":"2020-06-17T09:13:18","date_gmt":"2020-06-16T23:13:18","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=86940"},"modified":"2020-06-17T09:13:41","modified_gmt":"2020-06-16T23:13:41","slug":"research-retech-technology-peers-rerating-due-to-covid-19","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2020\/06\/17\/research-retech-technology-peers-rerating-due-to-covid-19\/","title":{"rendered":"RESEARCH: ReTech Technology, Peers Rerating Due To COVID-19"},"content":{"rendered":"

Pitt Street Research suspects covid-19 has provided a catalyst for ReTech Technology<\/em><\/p>\n

By Pitt Street Research<\/p>\n

ReTech Technology ((RTE)), the Shanghai-based Edtech player, reported $34.9M (+29% YoY) in FY19 revenue (year-end December).<\/p>\n

Attributable net profit experienced a slowdown in growth ($11.2M, +9.1% YoY), which was driven by significant investment in high-growth verticals – ESG and Language Learning – and higher one-off tax charges to enable the payment of the company’s first dividend.<\/p>\n

RTE’s balance sheet remains strong with net cash of $19.3m, providing options for future M&A. $1.2m in dividend was paid, representing a pay-out ratio of 10.3%.<\/p>\n

Acquisition of Shanghai Pantosoft<\/strong><\/p>\n

On the back of China’s proposed vocational education reforms to improve vocational education development via the co-operation with enterprises, in January RTE acquired 80% of Shanghai Pantosoft Co Limited, a China-based software provider, to complement its vocational vertical.<\/p>\n

This acquisition should enable RTE to tap deeper into the large and growing domestic vocational school market.<\/p>\n

COVID-19 drives demand for online learning<\/strong><\/p>\n

Recently, the occurrence of COVID-19 has changed the way people live and communicate, at least temporarily.<\/p>\n

Due to many students being affected by school closures, RTE’s Ai Learning Solutions has recently launched a new teaching model known as "Studio2Home" which essentially provides online teaching for remote students.<\/p>\n

As such, we see COVID-19 as a catalyst that drives RTE’s near-term growth.<\/p>\n

Valuation upgraded to $1.33 – 1.64 per share<\/strong><\/p>\n

We upgrade our valuation for RTE to $1.33 – 1.64 per share (previously $1.19 – 1.49 per share) based on a blended methodology (DCF, EV\/Sales).<\/p>\n

Download the full report<\/strong><\/p>\n

On Friday last week the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:<\/p>\n

https:\/\/www.fnarena.com\/index.php\/pitt-street-research\/RTE\/<\/a><\/p>\n

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n

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