Made in China:Results,TAL (+)MGM China (-)Sands China/Kweichow Moutai (=);CR Phoenix

In 1Q, TAL delivered revenue of USD322mn, +65% YoY and 6% aboveDBe/consensus. Enrollment increased by 62% YoY vs. +57% in 1QFY17. 1QNon-GAAP opm was 12.3%, 105bps ahead of consensus. Non-GAAP EPSrecorded USD0.43, 13%/9% above DBe/consensus. Management guided 2Qrevenue growth of 58-60% YoY (61-63% YoY in RMB terms), in line withDBe/street estimates. Deferred revenue was USD959mn, +72% YoY. TALannounced to change ordinary share/ADS ratio from 1:2 to 3:1, effective onAugust 16. We expect 2Q opm to decline by 2.6ppts YoY due to thecontinuous capacity expansion and summer promotion. We believe in 2H thiscapacity will have much better utilization rate due to the strong demand.

    Summer promotion students will also flow to full-price class. So revenue couldmaintain 60% above YoY growth in Q3 and Q4, meanwhile margin will haveYoY improvement. For full year FY18, we expect non GAAP operating profitwill increase 57% YoY to USD268mn. (Alvin Jiang – 852 2203 6241).

    Ex-branding fees (US$8m), 2Q property EBITDA fell a sharp 17% qoq (-1% yoy)to US$131m, partly hurt by bad luck. Results were largely in line with DB butmissed consensus. MGM missed out on the initial phase of Macau VIPrecovery in 4Q16-1Q17, but it managed to participate in the 2nd phase of theVIP resurgence with VIP rolling +9% qoq (+3% yoy) in 2Q. Unfortunately, dueto bad luck, this didn't get translated into GGR. Hence, GGR mkt share fellfrom 8.4% in 2Q16 to 6.7% in 2Q17 (7.5% in 1Q17). MGM Cotai propertyremained on track to open by 4Q2017 with no VIP rooms at opening. That said,we believe VIP rooms will be added a few months after opening. We revisedup MGM Macau's 2017F EBITDA by 1% to US$569m. Maintain Hold rating.

    (Karen Tang – 852 2203 6141)