COE, 51Talk Online Education Group

Will it survive?

• Can it pay its interest? -1442.9×
  Does not cover its interest
  Operating income ($14M) ÷ interest expense $10K
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? +$141M
  Net cash
  Cash $60M + ST investments $91M − debt $10M
  What this means

  Cash and short-term investments exceed every dollar of debt by $141M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital —
  Not meaningful here
  Invested capital ($81M) = debt $10M + equity ($31M) − cash
  Industry peers: median -3%
  What this means

  Invested capital is near zero or negative, usually years of buybacks pulling equity down. ROIC explodes or flips sign and stops meaning anything. Judge this one on Owner Earnings instead.

• Owner-earnings margin 10%
  Solid, recently turned positive
  latest $10M = operating cash $12M − maintenance capex $2M; positive each of the last 3 years, after an earlier loss stretch (8-yr median 1%)
  Industry peers: median 7%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 10% of revenue this year, a 1% median across 8 years.

• Are earnings backed by cash? $12M
  Loss, but cash-generative
  Net income ($17M) · cash from operations $12M
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

• Investing or harvesting? 5.29×
  Expanding
  Capex $2M ÷ depreciation $434K
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 0 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $96M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Miss
  Current ratio ≥ 2× · 0.63×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Miss
  Debt ≤ working capital · $10M vs ($35M) WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Earnings stability Miss
  A profit every year (10-yr record) · 8 loss years
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Miss
  Uninterrupted dividends · none paid
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth —
  Earnings +33% over the record · —
  What this means

  Earnings were negative early in the record, a growth rate isn't meaningful.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $-0.04/share (latest year $-0.05), the averaged base the calculator's gate runs on, and book value is $-0.09/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2018–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 2 of 8
  What this means

  Lost money in 6 year(s), look at what happened there before trusting the average.

• Operating margin −13% → −27% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about −13% early to −27% lately, median −35% — competition or costs are biting in.

• Owner earnings growth −17%/yr
  What this means

  Owner earnings shrank about 17% a year over the record.

• Worst year 2021 · −582.7% op. margin
  What this means

  Operations went underwater in 2021, understand why before trusting the good years.

• Share count +2.2%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.