Investment Rating - The investment rating for the company is "Buy" [1] Core Insights - The report indicates that revenue exceeded expectations primarily due to accelerated expansion of educational outlets and the launch of the "With Huizhong" initiative, while profit margins fell short of expectations mainly due to increased selection subsidies. However, the profitability of the core education business continues to improve [4] - The company has adjusted its FY2024-2026 Non-GAAP net profit estimates to $415 million (-20%), $591 million (-15%), and $783 million (-8%) respectively, with EPS projected at $0.19, $0.29, and $0.40 [4] - For FY24Q3, the company achieved revenue of $1.207 billion (+60%), surpassing consensus expectations of $1.098 billion, with a gross profit of $563 million (+46%) and a gross margin of 46.59%, down 4 percentage points year-on-year [4] Revenue Summary - The revenue growth was driven by significant increases in overseas examination preparation and consulting services, which grew by 52.6% and 25.7% year-on-year respectively. Domestic exam preparation business grew by 53.2%, and new business revenue increased by 72.7% [4] - The number of educational outlets increased from 843 to 911, with a year-on-year growth rate rising from 19% to 28% [4] - The "With Huizhong" platform has significantly boosted GMV, contributing to revenue growth [4] Profitability Summary - The gross profit for the quarter was $563 million (+46%), with a gross margin of 46.59% (-4 percentage points). Marketing and management expense ratios were 13% and 24% respectively, showing a decrease of 0.25 and 4.73 percentage points year-on-year [4] - The overall profit margin was impacted by a slight loss from the "Dongfang Zhenxuan" initiative, increased discount subsidies, and higher tax expenses from the acquisition of "Dongfang Zhenxuan" [4] - Excluding the impact of "Dongfang Zhenxuan," the profitability of the core education business improved by 3 percentage points year-on-year, indicating effective cost management despite rapid expansion [4]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its future performance [5]. Core Views - The company has demonstrated strong revenue growth, with Q3 FY2024 revenue reaching $1.207 billion, a year-over-year increase of 60.1%, significantly exceeding previous guidance [4]. - The company is expanding its store network aggressively, raising its annual expansion target to 30%, with a total of 911 schools and learning centers as of February 29, 2024, representing a 28% year-over-year increase [4]. - Despite some short-term profit impacts from non-recurring items and increased investments in its new business, the overall trend remains positive, with strong performance in its core education and training segments [5]. Summary by Sections Financial Performance - For Q3 FY2024, the company reported a net income of $87 million, a 6.8% increase year-over-year, and an operating profit of $113 million, up 70.6% year-over-year [4]. - The company’s deferred revenue balance reached $1.52 billion, a 31% year-over-year increase, indicating robust future revenue potential [4]. Revenue Growth - The company’s revenue for FY2024 is projected to be $4.304 billion, reflecting a growth rate of 43.6% compared to FY2023 [6]. - The revenue growth is driven by various segments, including overseas examination training, which grew by 53%, and new educational services, which saw a 73% increase [4]. Profitability Metrics - The gross margin for Q3 FY2024 was 46.6%, a decrease of 4.4 percentage points year-over-year, while the operating profit margin was 9.4%, an increase of 0.6 percentage points year-over-year [4]. - The report notes that the Non-GAAP operating profit margin was 11.7%, slightly below market expectations [4]. Future Projections - The company’s revenue forecasts for FY2024-2026 have been revised upwards to $4.304 billion, $5.621 billion, and $6.894 billion, respectively [5]. - The projected Non-GAAP operating profits for the same period are $510 million, $720 million, and $938 million, reflecting a slight downward adjustment from previous estimates [5].

Investment Rating - The investment rating for the company is "Buy" [3] Core Views - The company reported FY2024Q3 net revenue of $1.207 billion, a year-over-year increase of 60.1%, exceeding the previous quarter's guidance [1] - The education business showed strong performance during the peak season, with significant revenue growth driven by the rapid expansion of Dongfang Zhenxuan [1] - The company aims for a 30% year-over-year increase in teaching point capacity by the end of FY24 [1] - Non-GAAP operating profit for FY2024Q3 was $141 million, up 60.3% year-over-year, while Non-GAAP net profit was $105 million, up 9.8% year-over-year [1] - The company expects FY2024Q4 revenue to grow by 28% to 31%, reaching between $1.102 billion and $1.127 billion [2] Summary by Sections Financial Performance - For FY2024Q3, the company achieved a gross margin of 46.59%, with a Non-GAAP operating margin of 11.7% [2] - The company reported cash and cash equivalents of $2.014 billion, reflecting a year-over-year increase of 51.46% [2] - Deferred revenue stood at $1.522 billion, a year-over-year increase of 30.8% [2] Business Segments - Traditional education services, including study abroad consulting and adult education, saw year-over-year growth rates of 52.6%, 25.7%, and 53.2% respectively [1] - New business lines, particularly in live e-commerce and cultural tourism, contributed significantly to revenue growth, although profit margins were under pressure due to rapid expansion [1][2] Future Outlook - The company has adjusted its profit forecasts, expecting Non-GAAP net profits of $405 million, $543 million, and $688 million for FY2024, FY2025, and FY2026 respectively, representing year-over-year growth rates of 56.3%, 34.1%, and 26.8% [2]

Investment Rating - The report maintains a "Buy" rating for New Oriental [1][2][3] Core Views - New Oriental's revenue for Q3 FY24 reached USD 1.207 billion, a year-on-year increase of 60.1%, driven primarily by the growth in non-academic after-school tutoring and overseas test preparation services [1][3] - The company is experiencing strong enrollment growth in non-academic AST, with a projected increase in revenue to USD 241 million for Q3 FY24, representing a 72.7% year-on-year growth [1][3] - The expansion of learning centers is accelerating, with the number of centers increasing to 911, a 27.9% year-on-year growth, and the company aims for a 30% annual growth rate in learning centers [1][3] - The overseas test preparation and consulting business is recovering rapidly, contributing an estimated USD 254 million in revenue for Q3 FY24, a 40.1% year-on-year increase [1][3] - The report projects significant growth potential for non-academic AST, estimating over 2 million enrollments in FY24, with a potential market share of only 6% even at a scale of 12 million enrollments [1][3] Financial Summary - Revenue projections for FY24, FY25, and FY26 are raised to USD 4.213 billion, USD 5.422 billion, and USD 7.044 billion respectively, compared to previous estimates of USD 4 billion, USD 5.22 billion, and USD 6.72 billion [2][3] - Non-GAAP net profit forecasts for FY24, FY25, and FY26 remain at USD 482 million, USD 664 million, and USD 869 million respectively [2][3] - The target price under SOTP valuation is set at USD 110.81, indicating a potential upside of 43.8% from the current price [1][3]

Investment Rating - The report does not provide a specific investment rating for the company [1] Core Insights - The company reported a revenue of $1.21 billion for FY24Q3, exceeding previous guidance of $1.07 to $1.09 billion, representing a year-on-year growth of 60.1%. The net profit attributable to shareholders was $90 million, up 6.8% year-on-year, while the adjusted net profit was $100 million, reflecting a 9.8% increase [2][3] - The company experienced strong growth in new business segments, particularly in non-academic tutoring and smart learning systems, with a year-on-year increase of 72.7% in educational new business [2][3] - The company expanded its offline presence, with a total of 911 schools and learning centers as of February 2024, an increase of 68 centers since November 2023 [2] Summary by Sections Revenue Performance - FY24Q3 revenue reached $1.21 billion, exceeding guidance and showing a 60.1% year-on-year increase. Key growth drivers included overseas exam training and consultation, which grew by 52.6% and 25.7% respectively, and domestic exam training for adults and college students, which increased by 53.2% [2] Business Expansion - The company has expanded its offline network to 911 locations, with significant growth in non-academic tutoring, which saw a 62.8% increase in enrollment in FY24Q3 [2] - The active paid user count for smart learning systems reached 188,000, a 74.1% year-on-year increase [2] Profitability and Costs - The gross margin for FY24Q3 was 46.6%, down 4.4 percentage points year-on-year, primarily due to the impact of the Dongfang Zhenxuan business. However, the new education business showed significant gross margin growth [2] - Management expenses decreased, with a sales expense ratio of 13.4% and a management expense ratio of 23.8%, reflecting a year-on-year decline of 0.3 and 4.7 percentage points respectively [2] Investment Recommendations - The report suggests that traditional business is growing rapidly, and the demand for non-academic tutoring is strong. The company is expected to benefit from increased market concentration following supply-side adjustments in the education sector [3]

Investment Rating - The report maintains a BUY rating for New Oriental with a target price of US$102.50, revised from the previous target of US$104.50, indicating a potential upside of 33.0% from the current price of US$77.08 [2][3]. Core Insights - New Oriental's total net revenue for 3QFY24 increased by 60.1% year-over-year (YoY) to US$1,207 million, surpassing the consensus estimate of US$1,098 million by 10% [2]. - Non-GAAP net income rose by 9.8% YoY to US$105 million, although it fell short of the consensus estimate of US$132 million due to investments in East Buy and rapid capacity expansion affecting margin growth [2]. - The company expects total revenue for 4QFY24 to grow by 28-31% YoY, projecting revenue between US$1,102 million and US$1,127 million, compared to the consensus estimate of US$1,096 million [2]. Financial Performance Summary - For FY24E, total revenue is forecasted at US$4,293 million, with adjusted net profit expected to reach US$456.1 million [6]. - The revenue growth forecast for FY25E and FY26E has been increased by 8-10%, while earnings forecasts for the same periods have been trimmed by 3-6% due to the impact of capacity expansion on margins [2][6]. - The educational business segment showed strong momentum, with overseas test prep and study consulting revenue growing by 52.6% and 25.7% YoY, respectively, contributing approximately 21% to total revenue [2]. Capacity Expansion and Strategic Initiatives - New Oriental's capacity expansion accelerated, with the number of schools and learning centers increasing by 28% YoY to 911 as of the end of 3QFY24 [2]. - The company has raised its capacity expansion plan for FY24, now expecting a 30% YoY increase, up from the previous estimate of 20% [2]. - Investments in East Buy are aimed at enhancing private label product development and supply chain management, which is expected to drive customer base expansion and user engagement [2]. Valuation Methodology - The report employs a sum-of-the-parts (SOTP) valuation, attributing US$91.6 million to the educational and consulting business, US$6.8 million to East Buy, and US$4.2 million to the tourism business, reflecting their respective growth prospects and market positions [7][8].

Investment Rating - The report assigns a "Buy" rating for New Oriental Education Technology (9901 HK) with a target price of HKD 89.00, indicating a potential upside of 25.5% from the current closing price of HKD 70.90 [1][7]. Core Insights - In Q3 FY2024, New Oriental's revenue reached USD 1.207 billion, a year-on-year increase of 60%, driven by growth in new educational businesses and self-operated sales from Dongfang Zhenxuan [1]. - Adjusted operating profit was USD 140 million with an operating margin of 12%, remaining stable year-on-year, while adjusted net profit was USD 105 million, below expectations due to expansion costs and discounts on self-operated products [1][2]. - The company has increased its teaching points to 911, with a management forecast of over 30% expansion for FY2024, up from the previous 20% [1][2]. Financial Performance Summary - Revenue for Q3 FY2024 was USD 1.207 billion, exceeding Bloomberg consensus estimates of USD 1.088 billion [1][4]. - The traditional business segments, including study abroad consulting and exam preparation, saw revenue growth of 53% and 26% respectively, contributing 22% to total revenue [1][4]. - New business revenue grew by 73%, contributing approximately 20% to total revenue, with non-academic training enrollment increasing by 63% to 355,000 students [1][4]. - The gross margin for the education business improved by 2.8 percentage points year-on-year, while the operating margin increased by 8 percentage points [1][2]. Financial Forecast and Valuation - For Q4 FY2024, revenue is expected to grow by 38% to USD 1.184 billion, with an anticipated operating margin decline of 3 percentage points to 6% due to increased investments in Dongfang Zhenxuan and seasonal business impacts [2][5]. - The report projects a revenue increase of 30% for FY2025, with continued optimization of profit margins [2][5]. - The target price adjustment reflects a valuation of 25 times the education business's earnings, with a projected profit growth rate of 48% for FY2025 [2][5].

Financial Data and Key Metrics Changes - New Oriental reported an operating margin of 9.4% and a non-GAAP operating margin of 11.7% for the quarter, reflecting a strong bottom line performance [4][14] - Operating costs and expenses increased by 59.1% year-over-year to $1,093.9 million, with non-GAAP operating costs rising by 60.1% to $1,066.4 million [13] - Net income attributable to New Oriental was $87.2 million, a 6.8% increase year-over-year, while non-GAAP net income was $104.7 million, representing a 9.8% increase [14][15] Business Line Data and Key Metrics Changes - The overseas test prep business saw a revenue increase of approximately 53% in dollar terms or 59% in RMB terms year-over-year [5] - The overseas study consulting business recorded a revenue increase of about 26% in dollar terms or 31% in RMB terms year-over-year [6] - New educational business initiatives reported a revenue increase of 73% in dollar terms or 80% in RMB terms year-over-year [8] Market Data and Key Metrics Changes - The top 10 cities in China contributed over 60% of the non-academic tutoring courses business, with approximately 355,000 student enrollments recorded [6] - The intelligence learning system and device business had approximately 188,000 active paid users, with over 55% of revenue coming from the top 10 cities [7] Company Strategy and Development Direction - New Oriental plans to increase its capacity by about 30% for the fiscal year, with new learning centers expected to open in cities with strong performance [18] - The company aims to leverage new technologies such as AI and ChatGPT to enhance its offerings and improve operational efficiency [19][20] - The strategic focus includes sustaining healthy growth and expanding market share across all business lines [4][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining healthy growth despite Q4 typically being a slower quarter due to seasonality [17] - The company anticipates total net revenue for Q4 2024 to be in the range of $1,101.5 million to $1,127.3 million, representing a year-over-year increase of 28% to 31% in dollar terms [19] - Management highlighted the importance of adhering to guidance from Chinese authorities to enhance the nation's education level [20] Other Important Information - New Oriental's cash and cash equivalents, term deposits, and short-term investments totaled approximately $4.8 billion [11] - The company has authorized a share repurchase program, extending it through May 31, 2024, with approximately $195.3 million repurchased as of April 23, 2024 [12] Q&A Session Summary Question: Growth in different business segments in Q4 and capacity expansion sustainability - Management noted that Q4 is expected to be slower due to seasonality, but they remain optimistic about revenue growth across segments, with a capacity expansion guidance raised to 30% [22][24][25] Question: Education business margin expansion - Management indicated that the education business is seeing meaningful gross profit margin and non-GAAP operating margin expansion, with expectations for continued improvement in fiscal year 2025 [28][30] Question: East Buy margin volatility impact - Management could not provide specific financial results for East Buy but expressed optimism about its long-term growth and profitability [34] Question: Retention and utilization rates for learning centers - Management reported improving retention and utilization rates for both high school and non-academic courses, with a shorter breakeven period for new learning centers [38][40] Question: Operating cash flow drop and capital allocation - Management suggested analyzing cash flow on a year-over-year basis due to seasonality and confirmed ongoing share repurchase plans while discussing potential dividends [44][46] Question: Factors leading to larger loss from equity method investments - Management attributed the losses to a one-time impact from previous policy changes affecting investor companies [48][49]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for profitable short-term investing, highlighting the utility of a "Recent Price Strength" screen to identify stocks with strong fundamentals and upward momentum [1]. Group 1: Stock Performance - New Oriental Education (EDU) has shown a solid price increase of 17% over the past 12 weeks, indicating investor confidence in its potential upside [2]. - The stock has maintained a price increase of 1% over the last four weeks, suggesting that the upward trend is still intact [2]. - EDU is currently trading at 86.2% of its 52-week High-Low Range, indicating it may be on the verge of a breakout [2]. Group 2: Fundamental Strength - EDU carries a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [3]. - The Zacks Rank system has a strong track record, with Zacks Rank 1 stocks averaging an annual return of +25% since 1988 [3]. - The Average Broker Recommendation for EDU is 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [3]. Group 3: Investment Strategy - The article suggests that investors should consider other stocks that pass the "Recent Price Strength" screen, indicating a broader strategy for identifying potential winning stocks [4]. - The Zacks Premium Screens offer over 45 strategically created options to help investors find stocks that could outperform the market [4].

Financial Performance - Total net revenues for the third fiscal quarter of 2024 increased by 60.1% year over year to US$1,207.3 million[2] - Operating income rose by 70.6% year over year to US$113.4 million, with a GAAP operating margin of 9.4%[10] - Net income attributable to New Oriental increased by 6.8% year over year to US$87.2 million, with diluted net income per ADS of US$0.52[11] - New Oriental reported net revenues of $1,207,286 for the three months ended February 29, 2024, representing an increase of 60% compared to $754,153 for the same period in 2023[29] - Operating income for the same period was $113,432, up from $66,491, indicating a significant improvement in operational efficiency[29] - The company’s net income attributable to shareholders was $87,167, compared to $81,648 in the prior year, reflecting a year-over-year increase of 6.2%[29] - For the three months ended February 29, 2024, net income attributable to New Oriental was $87,167, an increase of 6.3% from $81,648 for the same period in 2023[31] - Non-GAAP net income attributable to New Oriental for the three months ended February 29, 2024, was $104,716, compared to $95,362 for the same period in 2023, reflecting a growth of 9.8%[31] - For the nine months ended February 29, 2024, net revenues were $3,176,907, a significant increase of 48.7% from $2,137,189 in the same period of 2023[37] - Operating income for the nine months ended February 29, 2024, was $339,898, compared to $141,992 for the same period in 2023, marking an increase of 139.5%[37] - Non-GAAP operating income for the nine months ended February 29, 2024, was $436,559, up from $201,242 in the same period of 2023, reflecting a growth of 116.7%[39] Cash and Assets - Cash and cash equivalents, term deposits, and short-term investments totaled approximately US$4.8 billion by the end of the quarter[5] - Cash and cash equivalents increased to $2,013,627 as of February 29, 2024, from $1,662,982 as of May 31, 2023, showing a growth of 21%[27] - Total current assets rose to $5,127,095, up from $4,413,887, marking an increase of 16%[27] - Cash, cash equivalents, and restricted cash at the end of the period on February 29, 2024, were $2,189,074, compared to $1,431,001 at the end of the same period in 2023[35] - The company’s total assets reached $7,189,543, an increase from $6,392,458, representing a growth of 12.5%[27] Liabilities and Expenses - Operating costs and expenses increased by 59.1% year over year to US$1,093.9 million, driven by growth in East Buy private label products[8] - The company’s operating cost and expenses totaled $1,093,854, compared to $687,662 in the previous year, reflecting a 59% increase[29] - Total liabilities increased to $3,039,460 from $2,577,670, which is a rise of 17.9%[27] - Total operating costs and expenses for the three months ended February 29, 2024, were $1,093,854, up 59% from $687,662 in the same period of 2023[31] Deferred Revenue and Enrollment - Deferred revenue increased by 30.8% year over year to US$1,521.7 million, reflecting cash collected upfront from customers[14] - New educational business initiatives achieved 72.7% revenue growth year over year, with approximately 355,000 student enrollments in non-academic tutoring courses[5] - The total number of schools and learning centers reached 911, an increase of 199 compared to the previous year[4] Future Outlook - The company expects total net revenues for the fourth quarter of fiscal year 2024 to be in the range of US$1,101.5 million to US$1,127.3 million, representing a year-over-year increase of 28% to 31%[17]