Consumer Discretionary

Report by Hedgeye

In recent months this EdTech firm has staged an eyewatering rally as investors debate whether the sector’s surge is sustainable - Felix Wang doesn't consider Koolearn's new livestreaming platform to be the next big thing and says the market is already pricing in >70% revenue growth for blended FY23/FY24 which is far too aggressive. Furthermore, based on his channel checks, staff and operations costs are likely to rise substantially. As the company looks to spend capital building out supply chain, fulfilment centres and logistics infrastructure, it will struggle to post a profit. If you are looking for exposure to the sector, New Oriental is the better choice.