Education Sector Key Recommendations: Xueda Education, East Buy, New Oriental, Action Education, TAL Education, China East Education

English summary

#Summary: We believe the education sector is a relatively good safe-haven sector amid market volatility and recommend active attention. Leading companies have solid fundamentals, and currently continue to deliver on market share gains, with most achieving revenue growth above 10% or faster and steadily improving profit margins. Meanwhile, most companies trade below 15x valuation, maintain decent shareholder returns, and have excellent cash flow from their business models. Therefore, from the perspectives of earnings growth, shareholder returns, valuation, and capital attention, the education sector currently offers significant allocation value. Xueda Education: High school tutoring prosperity persists, and earnings release is still expected despite a high base. Although 1H25 earnings base is high (revenue/profit +18%/42% YoY respectively), considering general high school enrollment expansion plus growth in junior high graduates, we believe the high school tutoring market remains relatively prosperous. With the company further focusing on its main business starting in 2H25, we expect revenue, profit, and collections in Q2 2026 to still achieve decent growth on a high base. …