Citi analyst Alice Cai has elevated QuantaSing (QSG, Financial) to a Buy rating from a previous Neutral stance, setting a new price target of $9.52, up from $6.10. This change comes after discussions with the company's management. The firm has also initiated a “90-day positive catalyst watch” on the stock, highlighting significant potential for growth.
The analyst points out that despite expanding production molds 5-6 times, Wakuku’s output is still unable to meet more than half of the demand, demonstrating strong market acceptance. Upcoming restocking for Wakuku Gen-2 slated for mid-June is anticipated to boost revenues immediately following a period of shortages. Additionally, new intellectual property set to launch in June and July showcases the depth of QuantaSing's product pipeline.
Citi views the company's shift from an online education model with low returns on invested capital to a model emphasizing repeat purchases and brand-focused intellectual property as transformative. This strategic pivot is deemed a significant development for QuantaSing (QSG, Financial), potentially enhancing its market position and revenue streams.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for QuantaSing Group Ltd (QSG, Financial) is $6.87 with a high estimate of $7.50 and a low estimate of $6.10. The average target implies an downside of 1.20% from the current price of $6.95. More detailed estimate data can be found on the QuantaSing Group Ltd (QSG) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, QuantaSing Group Ltd's (QSG, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
QSG Key Business Developments
Release Date: June 06, 2025
- Revenue: RMB570.7 million, a 39.6% decrease year-over-year.
- Gross Margin: 83.1%, compared to 84.6% in the same period last year.
- Net Income: RMB41.1 million, with a net margin of 7.2%.
- Adjusted Net Income: RMB37.8 million, representing an adjusted net margin of 6.6%.
- Cash and Cash Equivalents: RMB1,134.9 million as of March 31, 2025.
- Individual Online Learning Services Revenue: RMB467.2 million, accounting for 81.9% of total revenues.
- Enterprise Services Revenue: RMB48.1 million, a decline of 26.1% year-over-year.
- Consumer Business Revenue: RMB48.7 million, slightly down from RMB49.4 million a year ago.
- Gross Billings from Individual Online Learning Services: RMB515.6 million, a decline of 47.5% year-over-year.
- Total Operating Expenses: RMB441.1 million, a decrease of 45.2% from the same period last year.
- Sales and Marketing Expenses: RMB395.2 million, a decrease of 45.8% year-over-year.
- Research and Development Expenses: RMB20.9 million, a decline of 46.2% year-over-year.
- General and Administrative Expenses: RMB25 million, a decrease of 31.2% year-over-year.
- Basic and Diluted Net Income per Share: RMB0.25.
- Adjusted Basic and Diluted Net Income per Share: RMB0.23.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- QuantaSing Group Ltd (QSG, Financial) achieved revenue of RMB570.7 million, marking a significant milestone in their strategic shift from traffic-driven to product-driven business models.
- The company completed the consolidation of a major acquisition, positioning itself at the forefront of a high-growth market.
- Their financial literacy program and senior-focused recreation classes, such as the calligraphy program, have shown strong user engagement and retention rates.
- QuantaSing Group Ltd (QSG) has successfully expanded its study tour business to 16 cities, demonstrating strong market demand for their integrated approach.
- The company maintains a robust cash position, enabling strategic opportunities and financial resilience.
Negative Points
- Total revenues decreased by 39.6% year-over-year, reflecting a deliberate transition from traffic-driven growth.
- Gross billings from individual online learning services declined by 47.5% year-over-year.
- Revenues from enterprise services and consumer business saw declines, indicating challenges in these segments.
- The company anticipates near-term profit volatility as they optimize and scale operations.
- There is a strategic shift away from traditional education-related business, which has resulted in a decline in revenue from this segment.
