Investment Rating - The investment rating for New Oriental Education Technology (9901 HK) is "Buy" with a target price of HKD 80.00, indicating a potential upside of 46.1% from the current price of HKD 54.75 [1][9]. Core Insights - The report highlights that the Q4 FY2024 performance was below expectations, with revenue of USD 1.1 billion, a year-on-year increase of 32%, primarily driven by growth in new educational businesses. However, adjusted operating profit fell to USD 36 million, a 54% decline year-on-year, and below the expected USD 69 million, resulting in an adjusted operating margin of 3.2%, down 5.9 percentage points year-on-year [1][2]. - The core education business is expanding rapidly, with traditional services such as study abroad consulting and exam preparation showing year-on-year revenue growth of 17.7% to 25%. New business segments grew by 50%, contributing approximately 20% to total revenue, with non-academic training enrollment increasing by 39% to 875,000 students [1][2][3]. - The company is accelerating the expansion of its teaching points, reaching 1,025 locations as of May 31, with a net increase of 277 points year-on-year. The company plans to expand by 20-25% in FY2025 [1][2]. Financial Forecast and Valuation - For Q1 FY2025, revenue is expected to grow by 33% to USD 1.46 billion, with an adjusted operating margin projected to improve by 2 percentage points to 19%, excluding the impact of the spin-off of Huizhong [2][3]. - The financial outlook includes revenue projections of USD 5.46 billion for FY2025, with a year-on-year growth rate of 26.6%, and adjusted net profit expected to reach USD 603 million [3][10]. - The report adjusts the target price to HKD 80, based on a 25x price-to-earnings ratio, reflecting a conservative approach that excludes the value of the spin-off and cash [2][3]. Financial Data Overview - Key financial metrics for New Oriental Education Technology include: - Revenue (in million USD): 2023: 2,998, 2024: 4,314, 2025E: 5,462 [3][10]. - Net Profit (in million USD): 2023: 259, 2024: 381, 2025E: 603 [3][10]. - Adjusted Operating Margin: 2024: 11.3%, 2025E: 19% [2][3]. - Earnings Per Share (EPS in USD): 2024: 0.23, 2025E: 0.36 [3][10].

Financial Performance - For the fourth quarter of fiscal year 2024, net revenue increased by 32.1% year-over-year to $1,136.7 million[3]. - Operating profit for the fourth quarter decreased by 78.1% year-over-year to $10.5 million[3]. - Net profit attributable to New Oriental shareholders for the fourth quarter decreased by 6.9% year-over-year to $27.0 million[3]. - For the full fiscal year 2024, net revenue was $4,313.6 million, representing a 43.9% increase from $2,997.8 million in fiscal year 2023[5]. - Full year operating profit increased by 84.4% to $350.4 million compared to $190.0 million in the previous year[5]. - The company reported a total current asset value of $5.39 billion, up from $4.41 billion, marking an increase of approximately 22.2%[23]. - For the fiscal year ended May 31, 2024, net revenue was $4,313,586, an increase of 43.8% from $2,997,760 in the fiscal year 2023[31]. - Operating profit for the fiscal year ended May 31, 2024, was $350,425, an increase of 84.5% compared to $190,046 in the fiscal year 2023[31]. - Net profit attributable to shareholders for the fiscal year ended May 31, 2024, was $309,591, an increase of 74.5% from $177,341 in the fiscal year 2023[31]. Revenue Growth - The company reported a 50.3% year-over-year revenue growth in its new education businesses during the fourth quarter[8]. - In Q4 FY2024, the company's net revenue was $1,136.7 million, a year-over-year increase of 32.1% driven by new educational services and the growth of self-operated products and live e-commerce business[11]. - The company expects Q1 FY2025 net revenue (excluding live e-commerce business) to be between $1,254.7 million and $1,283.5 million, reflecting a year-over-year growth rate of 31% to 34%[17]. Operating Expenses - Operating costs and expenses for the quarter were $1,126.2 million, a year-over-year increase of 38.6%, with Non-GAAP operating costs rising 40.7% to $1,100.4 million[12]. - Total operating expenses for the three months ended May 31, 2024, were $1,126,152, an increase of 38.7% from $812,517 in the same period of 2023[25]. - The total operating expenses, excluding stock-based compensation, were $3,840,703,000 for the period, up from $2,717,926,000 in 2023, indicating a rise of 41.2%[33]. Profit Margins - The company's GAAP operating profit margin for the quarter was 0.9%, while the Non-GAAP operating profit margin was 3.2%[8]. - The company's operating profit for the quarter was $10.5 million, a decline of 78.1% year-over-year, resulting in an operating profit margin of 0.9% compared to 5.6% in the same quarter last year[12]. - The non-GAAP operating profit margin improved to 11.0% for the period ending May 31, 2024, up from 9.3% in the previous year[33]. Cash and Assets - Cash and cash equivalents as of May 31, 2024, were $1,389.4 million, with short-term investments amounting to $2,065.6 million[14]. - Cash and cash equivalents decreased to $1.39 billion from $1.66 billion, a decline of about 16.4% year-over-year[23]. - As of May 31, 2024, total assets amounted to $7.53 billion, an increase from $6.39 billion as of May 31, 2023, representing a growth of approximately 17.7%[23][24]. - The company reported a net cash provided by operating activities of $1,122,643,000 for the period, compared to $971,008,000 in 2023, an increase of 15.6%[36]. Shareholder Returns - The company has authorized a share repurchase plan of up to $400 million, with approximately 7.3 million ADS repurchased for about $296.1 million as of July 30, 2024[10]. - Basic and diluted earnings per American Depositary Share (ADS) for the three months ended May 31, 2024, were $0.16, compared to $0.18 for the same period in 2023[28]. - Basic earnings per American Depositary Share (ADS) increased to $2.30 for the period, compared to $1.54 in 2023, representing a growth of 49.4%[34]. User Growth - The number of active paying users for the smart learning system reached 188,000 in the fourth quarter[8]. - Total number of schools and learning centers increased to 1,025, up from 911 in the previous quarter and 748 a year ago[7]. Deferred Revenue - The deferred revenue balance at the end of Q4 FY2024 was $1,780.1 million, a 33.1% increase from $1,337.6 million at the end of Q4 FY2023[14].

Core Viewpoint - New Oriental Education & Technology Group Inc. reported strong revenue growth for the fourth fiscal quarter and fiscal year ended May 31, 2024, despite a significant decline in operating income and net income due to increased operating costs and expenses. Financial Highlights - Total net revenues for the fourth fiscal quarter increased by 32.1% year over year to US$1,136.7 million [2][8] - Operating income decreased by 78.1% year over year to US$10.5 million [2][11] - Net income attributable to New Oriental decreased by 6.9% year over year to US$27.0 million [2][12] - For the fiscal year 2024, net revenues reached US$4,313.6 million, a 43.9% increase year over year [16][36] - Operating income for the fiscal year was US$350.4 million, an 84.4% increase year over year [16][36] Operating Highlights - The total number of schools and learning centers increased to 1,025 as of May 31, 2024, up from 911 as of February 29, 2024 [4] - The overseas test preparation and overseas study consulting businesses grew by approximately 17.7% and 17.3% year over year, respectively [5] - New educational business initiatives recorded a revenue growth of 50.3% year over year [5] Cost and Expenses - Operating costs and expenses for the fourth quarter were US$1,126.2 million, a 38.6% increase year over year [9][10] - Cost of revenues increased by 38.5% year over year to US$542.4 million [10] - Selling and marketing expenses rose by 40.9% year over year to US$208.2 million [10] Cash Flow and Balance Sheet - Net operating cash inflow for the fourth fiscal quarter was approximately US$376.8 million [14] - As of May 31, 2024, cash and cash equivalents totaled US$1,389.4 million [15] - Deferred revenue increased by 33.1% year over year to US$1,780.1 million [15] Recent Developments - The company completed the acquisition of East Buy's online education business for RMB1.5 billion [6] - A share repurchase program was extended to May 31, 2025, with approximately 7.3 million ADSs repurchased for about US$296.1 million as of July 30, 2024 [7] Outlook - New Oriental expects total net revenues for the first quarter of fiscal year 2025 to be in the range of US$1,254.7 million to US$1,283.5 million, representing a year-over-year increase of 31% to 34% [18]

社会服务 2024 年 07 月 26 日 新东方-S (09901) ——电商业务下滑影响有限，聚焦教育业务高增长 报告原因：强调原有的投资评级 | --- | --- | |------------------------|---------------------| | 市场数据： | 2024 年 07 月 25 日 | | 收盘价（港币） | 57.50 | | 恒生中国企业指数 | 6016.51 | | 52 周最高/最低（港币） | 77.05/38.85 | | H 股市值（亿港币） | 951.7 | | 流通 H 股（百万股） | 1655.12 | | 汇率（人民币/港币） | 1.0948 | 一年内股价与基准指数对比走势： 资料来源：Bloomberg 证券分析师 黄哲 A0230513030001 huangzhe@swsresearch.com 联系人 黄哲 (8621)23297818× huangzhe@swsresearch.com 买入（维持）投资要点： 电商业务拖累有限。新东方控股子公司东方甄选人事变动，头部主播董宇辉离职。我们预计东方 甄选 25,26 财年收入下滑 ...

社会服务 2024 年 07 月 14 日 新东方-S (09901) —— 电商拖累逐步淡出,教育业务强势增长 报告原因:强调原有的投资评级 上 市 公 司 证 券 研 究 报 告 | --- | --- | |----------------------|---------------------| | 市场数据: | 2024 年 07 月 12 日 | | 收盘价(港币) | 60.45 | | 恒生中国企业指数 | 6532.63 | | 52 周最高/最低(港币) | 77.05/33.85 | | H 股市值(亿港币) | 1000.52 | | 流通 H 股(百万股) | 1655.12 | | 汇率(人民币/港币) | 1.0948 | 一年内股价与基准指数对比走势: 资料来源:Bloomberg 证券分析师 黄哲 A0230513030001 huangzhe@swsresearch.com 联系人 黄哲 (8621)23297818× huangzhe@swsresearch.com 买入(维持)投资要点: 我们预计新东方 24 财年第四季度(4QFY24,2024.3-2024.5)收 ...

Core Viewpoint - New Oriental Education & Technology Group Inc. (EDU) is expected to report better-than-expected Q4 FY 2024 financial results, leading to an upgrade in stock rating from Hold to Buy [1][6]. Financial Performance Expectations - Analysts project a 32% year-over-year revenue growth for EDU, reaching $1.14 billion in Q4 FY 2024, with normalized earnings per share (EPS) expected at $0.45 [2]. - The anticipated bottom line growth is expected to accelerate from 13% YoY in Q3 FY 2024 to 21% YoY in Q4 FY 2024 [2]. Predictions for Q4 Results - The company is likely to exceed its own guidance for learning center growth, with a potential increase of over 30% in capacity for FY 2024 [3]. - EDU's learning center network may have grown by 34% YoY, surpassing 1,000 centers by the end of May 2024, which would indicate a 10% quarter-over-quarter increase [4]. Operating Leverage and Marketing Costs - Positive operating leverage is expected to enhance profitability, with G&A costs increasing by 34% YoY in Q3 FY 2024, significantly lower than the 60% YoY surge in revenue [4]. - Marketing costs related to the livestreaming e-commerce business, East Buy, are anticipated to normalize in Q4 FY 2024, following a 57% YoY increase in Q3 FY 2024 [4]. Valuation Metrics - EDU's current Price-to-Earnings Growth (PEG) ratio is calculated at 0.74 times, indicating undervaluation compared to the fair valuation benchmark of 1 times [6].

Core Viewpoint - New Oriental Education and Technology Group Inc. will report its financial results for the fourth quarter ended May 31, 2024, on July 31, 2024, before the U.S. market opens [1] Group 1: Financial Reporting - The earnings conference call will take place at 8 AM U.S. Eastern Time on July 31, 2024, which corresponds to 8 PM Beijing/Hong Kong Time on the same day [1] - Participants can register in advance for the conference call using a provided link, which will give them access to dial-in numbers and a unique personal PIN [2] - A live and archived webcast of the conference call will be available for access on the company's investor relations website [2] Group 2: Company Overview - New Oriental is a provider of private educational services in China, offering a diverse range of educational programs, services, and products to a varied student population [4] - The company's offerings include educational services, test preparation courses, private label products, livestreaming e-commerce, and overseas study consulting services [4] - New Oriental is listed on both NYSE (NYSE: EDU) and SEHK (9901.SEHK), with its American Depositary Shares (ADSs) representing ten common shares [4]

Investment Rating - The report initiates coverage with a "Buy" rating for the company [5]. Core Views - The company is recognized as a leading player in the education and training sector, undergoing a successful transformation post the "double reduction" policy, with a strong recovery in traditional business and promising growth in new ventures [3][4]. Summary by Sections Company Overview - Founded in 1993, the company has evolved from a language training provider to a diversified education service platform, including educational services, lifestyle services, and cultural tourism [10]. - The company has a total share capital of 1,655 million shares and a market capitalization of 95.9 billion HKD [2]. Industry Analysis - The education and training regulatory environment is stabilizing, leading to improved competition dynamics as many smaller players have exited the market [4]. - Demand for quality education remains robust, with a projected market size for quality education exceeding 700 billion CNY by 2023, growing at a CAGR of approximately 30% from 2020 to 2023 [3][4]. Business Performance - The company reported a revenue of 1.2 billion USD in FY24Q3, reflecting a year-over-year increase of 60%, marking five consecutive quarters of double-digit growth [21]. - The traditional business segments, particularly study abroad and adult education, have shown strong recovery, with revenues increasing by 39% and 53% year-over-year, respectively [3][4]. Financial Projections - Revenue forecasts for FY24, FY25, and FY26 are projected at 4.305 billion USD, 5.329 billion USD, and 6.509 billion USD, respectively, with year-over-year growth rates of 44%, 24%, and 22% [5]. - Adjusted net profits are expected to reach 315 million USD, 441 million USD, and 656 million USD for the same periods, with growth rates of 77.8%, 39.8%, and 48.9% [5]. Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, estimating a target market value of 145.6 billion HKD, which corresponds to a target price of 88 HKD per share [5].

Investment Rating - The report maintains a "Buy" rating for New Oriental Education Technology (9901 HK) with a target price of HKD 89.00, indicating a potential upside of 40.5% from the current price of HKD 63.35 [2][12]. Core Insights - The report projects a revenue of USD 1.128 billion for Q4 FY2024, representing a year-on-year growth of 31%, aligning with the company's guidance of 28-31% growth [1]. - The expansion of offline teaching points is on track, with a projected 10% quarter-on-quarter increase, contributing to a total annual target of 30% growth [1]. - The contribution from Dongfang Zhenxuan is expected to account for 20% of New Oriental's revenue, with a projected revenue increase of 58% year-on-year to RMB 1.59 billion (USD 220 million) in Q4 [1][2]. Financial Overview - For FY2024, the estimated revenue is USD 4.305 billion, with a projected operating profit margin of 14% for FY2025 and 16% for FY2026, indicating continuous margin improvement [2][13]. - The report forecasts a net profit of USD 770 million for Q4 FY2024, with an adjusted operating profit of USD 69 million, reflecting a decrease in operating profit margin by 3 percentage points year-on-year [1][13]. - The financial data shows a significant recovery from previous years, with net profit expected to rise to USD 421 million in FY2024 and USD 628 million in FY2025 [3][13]. Revenue Breakdown - The revenue from study abroad preparation is expected to grow by 21%, while high school education and non-subject skills training are also projected to grow by 21% and 59%, respectively [1]. - The report highlights that the offline teaching point expansion will have a minor negative impact on overall gross margin, estimated at approximately -0.4 percentage points [1]. Market Position - New Oriental's market position remains strong, with a focus on expanding its educational services and adapting to market demands, particularly in new first-tier cities and lower-tier cities [1][2].

Core Viewpoint - New Oriental Education & Technology Group Inc. has extended its share repurchase program, allowing for the repurchase of up to approximately US$153.7 million of its shares through May 31, 2025, following a previous repurchase of approximately US$246.3 million worth of its ADSs [1][2]. Group 1 - The board of directors has authorized the extension of the Share Repurchase Program, which was initially launched in 2022 and amended in 2023 [1]. - As of the announcement date, the company has repurchased approximately US$246.3 million worth of its American Depositary Shares (ADSs) under the program [1]. - There remains a balance of approximately US$153.7 million that has not yet been utilized under the Share Repurchase Program [1]. Group 2 - The repurchases may occur through various methods, including open market transactions, privately negotiated transactions, and block trades, depending on market conditions [2]. - The board will periodically review the Share Repurchase Program and may authorize adjustments to its terms and size [2]. Group 3 - New Oriental is a provider of private educational services in China, offering a wide range of educational programs, services, and products [3]. - The company's offerings include educational services, test preparation courses, overseas study consulting services, and educational materials [3]. - New Oriental is listed on both NYSE and SEHK, with its ADSs representing ten common shares [3].