Education Sector May Tracker: Tablet Volume Down, Prices Up; Study Abroad Visas Recovering

Overview

This research report is Goldman Sachs's monthly high-frequency data tracker for the China education sector, covering May 2026 data on AI education applications, learning tablet sales, mobile app activity, training institution licenses, study abroad trends, and Oriental Selection e-commerce performance. The core conclusion indicates structural differentiation in the industry: AI-native learning tools show strong user growth, while traditional K-12 online platforms see slowing growth. Learning tablet sales declined significantly due to a high base from the previous year, but product premiumization has stabilized average prices. Overseas study demand showed marginal improvement, and live commerce business relied on new channels to drive growth. Based on fundamentals and valuation, the firm is positive on New Oriental and TAL, and cautious on Oriental Selection and The Original Group.

Core views

In AI education applications, Doubao Study (owned by ByteDance) saw its Daily Active Users (DAU) grow 146% YoY by the end of May, solidifying its position as China's sixth-largest AI-native application. Gauth maintained its leadership with monthly revenue increasing 24% YoY to approximately $1.1 million. In contrast, growth at traditional K-12 online education platforms slowed, with Xueersi Online School MAU YoY growth declining to 10%, Peiyou APP maintained 19% growth, while apps like Youdao continued to see MaU decline YoY. The learning tablet market faced significant headwinds in May, with the combined GMV of six mainstream brands on major e-commerce platforms falling 35% YoY, primarily driven by the high base from the same period last year. TAL sold approximately 96,000 units with GMV of approximately RMB 355 million, down 24% YoY. A positive signal is that TAL's average selling price (ASP) decline narrowed to -4% YoY, indicating that product structure optimization and premiumization strategies are offsetting sales pressure. From a quarterly perspective, TAL's Year-to-Date (starting in May) FY26 Q1 tracking GMV decreased slightly by 1% YoY, missing the previously expected +11%. Overseas study demand showed signs of marginal recovery. In Q1 2026, the total number of student visas issued to Chinese citizens by Canada, Australia, and the United Kingdom declined 9% YoY, a significant narrowing compared to the full-year 2025 figure of -16% and Q1 2025 figure of -22%, suggesting overseas study demand is gradually recovering. Oriental Selection's e-commerce business showed characteristics of shifting momentum between old and new drivers. May Douyin GMV grew 38% YoY to approximately RMB 1.03 billion, driven mainly by a 246% surge in GMV from new platforms, while GMV from the three original core accounts declined 2%. The proportion of GMV from private label products rose to 29%. Oriental Selection's App MAU increased 38% YoY, but daily views on the main channel declined 21% YoY, indicating ongoing adjustments in traffic structure. Offline training supply continues to contract. The number of non-subject training institutions fell 0.2% MoM to 117,300 in May, while subject-based institutions fell 0.1% MoM to 9,015, indicating that supply-side cleanup during the compliance process continues.

Analysis framework

The report adopts a high-frequency alternative data tracking framework, integrating e-commerce sales data, mobile app activity monitoring, government visa statistics, and training license databases to build a leading indicator system for industry health that precedes financial statements. Analytically, the firm disaggregates aggregate data into 'volume' and 'price' dimensions (e.g., splitting tablet GMV into shipment volume and ASP) to distinguish cyclical fluctuations from structural trends; it also stratifies assessment of legacy versus new businesses (e.g., splitting Oriental Selection into old and new platforms) to more accurately gauge a company's true growth drivers. Ultimately, these high-frequency indicators are used to validate and adjust earnings forecasts and serve as input variables for the SOTP valuation model.

Methodology notes

• Company Fundamentals & Financial Framework

  Application of SOTP Valuation in Education Groups

  For diversified education groups like New Oriental and TAL, the report does not use a single P/E multiple. Instead, it applies different EV/NOPAT multiples to separate business segments such as high school tutoring, quality education, and content solutions, then sums them up with net cash and deducts a holding discount. This method more accurately reflects the differentiated growth and profitability of each business line, avoiding undervaluation where high-growth businesses are averaged down by low-growth ones.

• Industry/Industrial Analysis FrameworkVolume-price decomposition

  Attribution Analysis of GMV by Volume and Price

  When analyzing the learning tablet market, the report focuses not only on the YoY change in total GMV but also decomposes it into shipment volume growth and ASP growth. When total volume declines, if the ASP decline narrows or turns positive, it indicates manufacturers are offsetting weak demand through product upgrades, which is an important leading signal for determining whether the industry has hit bottom.

• Industry/Industrial Analysis FrameworkAdoption Curve / S-Curve

  Judging User Growth Stage of AI-Native Applications

  By comparing the DAU growth rate of AI applications like Doubao Study (+146%) with the low-single-digit growth of traditional education apps, the report implicitly applies technology adoption lifecycle theory. AI-new products in the steep section of the S-curve show explosive growth, while mature-stage products enter stock competition. This differentiation helps investors identify genuine incremental opportunities within the industry.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• New Oriental (EDU/9901.HK)

  Beneficiary: Study abroad demand recovery combined with low valuation forms a dual catalyst

  Strengths

  CY26E P/E is only 11x, dropping to just 3x after net cash; narrowing decline in study abroad visas directly benefits its study abroad exam and consulting business; diversified new businesses (non-subject tutoring, cultural tourism) provide a second growth curve

  Weaknesses

  Course registration-related App MAU fell 8% YoY in May, showing some traditional businesses still face pressure in customer acquisition

  Comparison

  Valuation lower than TAL (12x CY26E P/E), but business structure is more skewed towards traditional study abroad, and AI hardware layout is weaker than TAL

  Risks

  Declining K-12 population suppresses long-term TAM; study abroad demand obstructed again; disruptive impact of AI on learning scenarios

• TAL

  Beneficiary: Premiumization strategy for AI learning hardware proves effective, high user stickiness in quality education

  Strengths

  Learning tablet ASP decline continues to narrow, product power recognized by the market; Xueersi Smart App MAU doubled YoY to 3.6 million; Peiyou business MAU maintained steady 19% growth

  Weaknesses

  May tablet GMV down 24% YoY, 1QFY26 tracking GMV missed expectations; Xueersi Online School MAU growth slowed to 10%

  Comparison

  AI hardware and user activity metrics better than New Oriental, but valuation slightly higher (12x vs 11x CY26E P/E)

  Risks

  Offline capacity expansion underperforms expectations; poor results from new smart hardware launches; difficulties in overseas business expansion

• Oriental Selection (1797.HK)

  Negatively impacted: Core account traffic declining, growth overly dependent on new channels

  Strengths

  New platform GMV up 246% YoY demonstrates channel expansion capability; private label proportion rising to 29% enhances gross margin potential; App MAU up 38% YoY accumulates private domain users

  Weaknesses

  GMV from original three core accounts down 2% YoY; daily views on main channel down 21% YoY; current stock price implies valuation still higher than comparable e-commerce platform companies

  Comparison

  Growth quality weaker than New Oriental and TAL, stronger dependency on traffic, hence given a Sell rating

  Risks

  Unsustainable growth in new channels; reduced support from parent company; shareholder return improvements fall short of expectations

Key data

• Doubao Study DAU YoY Growth Rate+146%As of end-May 2026, ranked as China's sixth-largest AI-native application
• Online GMV of Top Six Brand Learning Tablets-35% YoYData from major e-commerce platforms in May 2026, affected by high base from the previous year
• TAL Learning Tablet ASP YoY Change-4%Narrowed further from -5% in April; a 7% MoM drop was due to June 18 promotions
• Student Visas for Chinese Nationals in Canada, Australia, UK-9% YoYQ1 2026, showing significant improvement compared to full-year 2025 figure of -16%
• Oriental Selection Douyin GMVApproximately RMB 1.03 billion+38% YoY, +7% MoM; new platforms contributed +246% incremental growth
• New Oriental CY26E P/E11xOnly 3x after excluding cash, valuation at historic lows

Impact & implications

The report believes the current education sector presents clear structural opportunities. The rapid penetration of AI education tools validates the commercial viability of technology-enabled learning, benefiting top-tier enterprises with AI R&D capabilities and user bases. While learning tablets face short-term pressure, stabilizing ASP suggests the industry competition is shifting from price wars to value wars, favoring manufacturers with quality content and hardware ecosystems to recover margins. The marginal improvement in study abroad services provides a bottom support for New Oriental's traditional strength. Conversely, pure traffic-driven live streaming models face growth bottlenecks, and Oriental Selection must prove the replicability of its multi-channel and new business models. Overall, leading companies whose valuations already fully reflect pessimistic expectations offer allocation value.

Risks

• Continued contraction of K-12适龄 population compresses the industry's long-term market space
• Intensified market competition or enhanced consumer attribute may put pressure on pricing
• Study abroad demand once again disrupted by geopolitical or policy factors
• AI technology causing disruptive substitution effects on traditional learning scenarios
• Improvement in operational efficiency and profit margins falls short of expectations
• Unfavorable changes in education industry regulatory policies

What to watch

• Changes in user retention rates and payment conversion rates for AI education applications
• ASP trends and inventory destocking status after the June 18 promotion for learning tablets
• Follow-up adjustments in student visa policies for China by various countries
• Progress in verifying the profit models of Oriental Selection's new sales channels
• Turning point signals in the number of offline training institution licenses