2. 2
Disclaimer
This presentation does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of TAL Education
Group (the “Company”) in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of
or be relied on in connection with any contract or commitment whatsoever.
This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks
and special considerations involved with an investment in the securities of the Company. No part of this document shall form the basis
of or be relied upon in connection with any contract or commitment whatsoever.
This presentation has been prepared by the Company solely for use at this presentation. The information contained in this presentation
has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance
should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of
the Company or any of its affiliates, advisors or representatives will be liable (in negligence or otherwise) for any loss howsoever arising
from any use of this presentation or its contents or otherwise arising in connection with the presentation.
This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the
intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial
condition of the Company. Such forward-looking statements are not guarantees of future performance and involve risks and
uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions.
The Company or any of its affiliates, advisors or representatives has no obligation and does not undertake to revise forward-looking
statements to reflect future events or circumstances.
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4. 4
Overview of Xueersi
Note
“Student enrollments” refers to the total number of courses enrolled in and paid for by our students across each of our
business formats, comprised of small classes, personalized premium services, and online courses, including multiple
courses enrolled in and paid for by the same students
Leading K-12 after-school tutoring services provider in China
Student enrollments of approximately 192,650 in first fiscal quarter 2014, up by
17.1% YoY
Blended ASP of US$319 in first fiscal quarter 2014, up by 6.3% YoY
255 learning centers in 15 major cities in China as of May 31, 2013
Operates www.eduu.com, a leading online education platform in China
Revenue of US$61.4 million and net income of US$8.1 million in first fiscal
quarter 2014, representing a YoY growth of 24.5% and 62.7%, respectively
Cash, cash equivalents, and term deposits of US$271.1 million as of May
31, 2013
Outstanding admission rates to key schools and student performance on
selective competitions
High student retention rate and recurring revenue streams
Financial
Snapshot
Our
Results
Our
Network
Our
Business
5. 5
Primary School Middle School High School
K 1 2 3 4 5 6 7 8 9 10 11 12
Mathematics
English
Chinese
Physics - - - - - - - -
Chemistry - - - - - - - - -
Biology - - - - - - - - - -
Comprehensive Tutoring Service Offerings
We Cover Core Subjects in the K-12 School Curriculum (1)
Offered Through Multiple Class Formats
Small Classes
- Launched in 2003
Personalized Premium Services
(1-on-1)
- Launched in 2007
Online Courses
- Launched in 2010
Note
1. • Denotes currently offered course
- Denotes not applicable for the grade level
Opportunity to develop multi-subject, multi-year relationships with our students
6. 6
Why Is After-School Tutoring So Important In China
Source Ministry of Education in China
College Entrance
Examination – “Gao Kao”
Higher
Education
High School
Middle School
Primary School
High School Entrance
Examination –
“Zhong Kao”
Middle School Entry
Selection Process –
“Xiao Sheng Chu”
Examination-Focused Education System Fierce Competition to Enter Key Schools
Source iResearch, www.usnews.com, 2010
70%
30% 28%
5%
4-Year Degree
College (U.S.)
4-Year Degree
College
(China)
Top 100
Universities
(U.S.)
Top 100
Universities
(China)
College Admission Rate (1)
82%
30%
23%
Regular HS Beijing Key HS Shanghai Key HS
High School Admission Rate in China (1)
(China National)
Note
1. “Admission rate” refers to the number of students admitted over the total examination takers in China or denoted cities; and
refers to the number of students admitted over the total application pool in the U.S.
7. Spending on Children’s Education Accounts for 30.1% of
Total Household Income in Chinese Urban Families
7
Source : China Youth & Children Research Center (中国青少年研究中心家庭教育研究所), 2011
National Bureau of Statistics of China
Since 1990, expenditure by Chinese families on education has been growing by an average of
29.3% each year, much faster than the growth of urban household income or China‟s GDP.
Urban Chinese parents spend 30.1% of their total household income on their children‟s
education during the time when their children are in primary and Junior high schools.
Average Growth of GDP 16.6%
Average growth of urban
household income 13.6%
Average Growth of education
expenditure
29.3%
26.6% of Chinese families have made expenditures on education for the purpose of preparing
their children to have a better chance to be admitted to their school of choice.
8. 8
75%
55%
70%
89%
30%-35%
Primary
School
Middle
School
High School K-12
Average in
2009
Near Term
Potential in
Key Cities
27.9
33.6
40.2
47.6
56.0
65.7
2009E 2010F 2011F 2012F 2013F 2014F
Small Class Other Class Formats Combined
(US$Billon)
Source iResearch, July 2010 report
China vs. South Korea
(%)
South Korea
Penetration of Tutoring Services (1)Rapid K-12 Market Growth Led by Small Class
Highly fragmented market with no player with more than 1% market share
China
Huge, Fragmented and Underpenetrated Market
Note
1. Penetration rate refers to % of population in each corresponding school level enrolled in tutoring services
9. 9
StudentsTeachers
Content
High student retention rate
Ability to attract top-quality teachers
Self-Reinforcing Cycles
Xueersi’s Strong Brand Drives Competitive Advantage
Performance
High referral rate and low student
acquisition costs
Premium pricing power
10. Outstanding academic achievement of our students
Gold medal winners in 2012 at the 53rd International
Mathematics Olympiad
Gold medal winners in 2012 at the 43rd International
Physics Olympiad
Six of our students in Guangzhou were on the team
that received the HuaLuoGeng Golden Cup for
excellence in mathematics
Eight of our students in Beijing achieved the top
score in their city districts on Zhongkao, China’s
high-school entrance exam
11. 11
Selective Hiring
Process
Comprehensive
Training
Rigorous
Evaluation Process
Proprietary Content Development
Review local
curriculum
requirements
Analyze latest
trends
Develop tailored
course materials
Collect teacher and
student feedback
Regular evaluation and improvement process
In-house content development
team of over 200 people
External education experts hired
as advisors
Optimized Teacher Management System
High Teaching Quality and Proprietary Content
Top university graduates
Rounds of tests and
interviews
Comprehensive new
teacher training
Regular ongoing training
Continuous evaluation
Performance based
compensation
IP transfer agreement with
leading international publisher
12. 12
Leading Platform of Education-Related Websites
Average of Over 3.6mm Daily Page Views (1)
Preparation for China's college entrance examination
Preparation for China's high school entrance examination
Mathematics, competitions, and preparation for middle school admissions
English language study and related examinations
Chinese composition
Preschool, kindergarten, and preparation for primary school admissions
Note
Based on company data of average daily page views in fiscal year 2013
A portal to Company’s education-related websites, which include the following:
13. 13
Opportunity to Further Penetrate Existing Markets
Open new learning centers and expand capacity of existing centers
Offer full range of subjects and grade levels in all cities
Significant Opportunities in Both Historical and Newly Entered Cities
City
Ranking by
Population
Ranking by GDP
per Capita
# of Small
Class Centers
# of One-on-
One Centers
# of Total
Learning
Centers
Beijing #2 #2 78 44 122
Shanghai #1 #1 25 11 36
Shenzhen #40 #4 7 5 12
Guangzhou #6 #3 11 8 19
Tianjin #4 #6 10 6 16
Wuhan #5 #12 7 4 11
Xi‟an #11 #28 6 5 11
Chengdu #12 #13 3 5 8
Nanjing #9 #16 4 4 8
Hangzhou #15 #8 2 3 5
Taiyuan #17 #59 2 2
Chongqing #8 #7 1 1
Suzhou #34 #5 1 1
Zhengzhou #19 #22 2 2
Shenyang #7 #17 1 1
Total 160 95 255
Source China Statistical Yearbook, Company data
14. Address existing
students' specific
academic requirements
Extend our service
offerings to new students
Continue to Roll Out Business Lines Complementary to Core
Premium
priced segment –
Hourly rate between
RMB 160 – 500+
Key Developments
Launched in Beijing in September 2007
Launched in Shanghai in second half of FY2011, and has covered 10 cities as of May
31, 2013
95 one-on-one learning centers in operation as of May 31, 2013
14
The Role of Personalized Premium Services (One-on-One) In Our Business
15. Management Team
Bangxin Zhang: Chairman and CEO since our inception.
Mr. Zhang received his bachelor's degree in Life Sciences from Sichuan
University in 2001, was in the postgraduate program of the Life Science School
of Peking University from 2002 to 2007, and received an EMBA degree from
China Europe International Business School in 2009.
Joseph Kauffman: CFO since 2010, 3 years with TAL in June.
Mr. Kauffman received his bachelor„s degree from Williams College in 1999 and
an MBA degree from the Harvard Business School in 2006. Has deep industry
experience (EDU, 4 years) and multinational mindset (Coca-Cola, 5 years) .
Yachao Liu: Senior VP since 2011, 7+ years with TAL.
Dr. Liu received his bachelor´s degree in Mechanics from Peking University in
2003 and Ph.D. from the Institute of Mechanics of the Chinese Academy of
Science in 2008.
Yunfeng Bai: Senior VP since 2011, 7+ years with TAL.
Mr. Bai received his bachelor´s degree in Engineering Automation from Beijing
University of Aeronautics and Astronautics in 2003, attended the CEO class of
Guanghua Management School of Peking University between 2008 and 2009
and received an EMBA degree from China Europe International Business School
in 2012.
16. Distinguished Team of Independent Directors
•Serves as our Independent
Director and audit committee
financial expert since Oct. 2010
•Extensive experience in SEC
reporting, finance and
accounting
•COO of Ctrip.com International,
Ltd, (NASDAQ: CTRP) since May
2012, CFO of Ctrip.com from
2005 to 2012
•Previously worked with KPMG
LLP in Silicon Valley, CA, USA
•Member of the American
Institute of Certified Public
Accountants and a member of
the State of California Certified
Public Accountants
•Serves as our Independent
Director since Jun. 2011
•Executive Vice President and
Chief Editor of SINA Corporation
(NASDAQ: SINA) , where he
has worked in various senior
management roles since 1997
•Independent director of
Shenzhen-listed Beijing Enlight
Media Co., Ltd. since Feb. 2010
•Received his MBA degree from
China-Europe International
Business School
•Serves as our Independent
Director since Jun. 2011
•Founder, chairman and CEO of
Vancl Corporation
•Co-founded Joyo.com in
2000, which was later known as
Amazon China
•Founded the Book Review in
1998 and co-founded the Xishu
Book Club, now Xishu Books, a
major online book retailer, in
1997
16
Jane Jie Sun Tong Chen Wei Wang
18. 18
’000s (Fiscal Quarter Ended May 31)
Enrollments(1) ASP (2)
US$ (Fiscal Quarter Ended May 31)
Strong Enrollment Growth and Pricing Power
Note
1. Defined as total student enrollments of small class, personalized premium service (1-on-1) and online courses
2. Total revenue / total enrollments
131
174 182
227
257
277
300
319
68
215
383
486
690
816
165
193
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13Q1 FY14Q1
19. 19
US$MM
Revenue Gross Profit and Margin (1)
US$MM
Robust Top Line and Attractive Gross Margins
Note
1. Excluding share based compensation expenses of US$521 thousand, US$418 thousand ,US$106 thousand, US$51 thousand,
US$11 thousand, in cost of revenues for FY11, FY12, FY13, FY13 1Q and FY14 1Q, respectively
Margin: 50.8% 51.0% 46.0% 48.0%49.2% 47.7%46.2%
5
19
32
54
82
110
24
29
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1FY14 Q1
9
37
69
111
178
226
49
61
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY13 Q1 FY14 Q1
48.8%
21. 21
Deferred Revenues Cash, Cash Equivalents and Term Deposits
US$MM US$MM
Strong Balance Sheet
77
86
108 103 107 103
154
179
199
224
239
249
209
271
Dividend payment
of US$39 mm
22. 22
US$MM
Attractive Free Cash Flow
23 27
54
73
65
5 4 5 12 7
0
20
40
60
80
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Cash Flow from Operations Capital Expenditure
Note: Capital expenditure in fiscal 2012 was US$74.3 million. The significant increase was primarily related to the
purchase of office space for headquarter in Beijing in the amount of $62.5 million. The capital expenditure of US$12
million in fiscal 2012 shown in the graph is excluding the impact from the purchase of this office space.
Based on market cap of US$800 million, TAL has a Free Cash Flow Yield of 7%
