Investment Highlights

• Diversified Scalable Technology Platform Infrastructure Enabling Diversified Course Offerings - QuantaSing started its journey in July 2019 by launching its flagship online financial learning service, QiNiu. The company gained significant traction early on, making it the largest online financial literacy platform for adults in China. It then introduced enterprise-focused services in February 2020, followed by the launch of JiangZhen and QianChi as a part of the company’s other personal interest courses in August 2021 and June 2022, respectively. Building on its initial success in financial literacy and broadening the scope of its technology platform for adult learners, the company built “truly” diversified offerings, enabling it to scale, increase its revenue sources, and reduce its dependency on a single segment.

• Robust KPIs, Signifying Effective Strategy Implementation - QuantaSing has laid out a multifaceted growth strategy that leverages its core strengths in technology and educational content. The strategy focuses on increasing learners' engagement and retention by continually enriching course offerings based on proven customer demand along with quality human capital and expanding the user base by using data-driven marketing approaches. Additionally, the company invests heavily in building proprietary technology and data analytics to optimize learner experience and operational efficiency. These efforts are being reflected in the company’s operating metrics and financial numbers. The total registered users grew from 17.0 million as of June 2021 to 94.3 million as of June 2023, while the total paying learners saw a healthy increase from 0.8 million for 2021 to 1.1 million for 2022. Moreover, the company has also extended its successful business model to other platforms and diversified by providing enterprise services. The enterprise services revenue has registered robust growth from RMB 144.31 million in 2021 to RMB 340.9 million in 2023. Finally, the company is eyeing overseas expansion and considering strategic collaborations, potentially through investments or acquisitions, to expand its market share. Recently, the company announced the acquisition of Kelly’s Education, an online language education platform, and forayed into the live e-commerce sector to further drive long-term growth.

• The Need for Lifelong and Adult Learning - The rapid economic and technological growth in China has spurred an increasing demand for lifelong and adult learning as an economic imperative. Driven by advancements in automation and digitization and an aging workforce, the need for continuous upskilling and reskilling has never been greater. This urgency is further amplified by the deeply ingrained Chinese perspective that sees education as a holistic, lifelong endeavor, a view supported by overwhelming public opinion in recent surveys. In a society that highly values education for personal growth, workplace competence, and staying abreast with current times, adult learning programs and personal development are essential for sustained career paths and the overall economic vitality of the nation.

• Leader in a Fragmented, Rapidly Growing Market - QuantaSing has secured a dominant role in China’s fragmented but rapidly expanding adult personal interest learning market. In a market characterized by the presence of many players, QuantaSing has held a leading position for two consecutive years. The adult personal interest learning market generated a revenue of RMB 153.5 billion in 2022 and is expected to grow at a CAGR of 14.1% from 2022 to 2027. While QuantaSing primarily focuses on the individual segments, there’s also burgeoning potential in the enterprise services segment, where businesses are increasingly investing in professional development programs for employees. QuantaSing’s growing brand recognition and customer loyalty allows it to leverage cross-selling and upselling opportunities, acting as a potential barrier to entry in a competitive market.

• Valuation - A blended discounted cash flow analysis and comparable company analysis approach, assuming a 13.0% discount rate, 1.5% terminal growth, and 1.95x EV/Sales multiple, yielded a valuation of $10.75 per share, contingent on successful execution by the company