Sou Hu Cai Jing·2025-04-01 23:34Core Viewpoint - New Oriental Holdings has reported a significant decline in both revenue and net profit for 2024, continuing a downward trend from 2023, prompting a proposal to privatize its Hong Kong-listed subsidiary, New Oriental Energy [2][3][5]. Financial Performance - New Oriental Holdings' revenue decreased from 1,540.44 billion yuan in 2022 to 1,358.36 billion yuan in 2024, marking a continuous decline over the years [3][5]. - The company's net profit attributable to shareholders fell by 36.64% to 44.93 billion yuan in 2024 [3][5]. - The main revenue sources, natural gas retail and wholesale, accounted for over 65% of total revenue, with combined income dropping from 1,038.8 billion yuan in 2022 to 908.9 billion yuan in 2024 [3][5]. Market Conditions - Despite steady growth in natural gas retail and wholesale volumes, revenue decline is attributed to falling natural gas prices, which significantly impacted profit margins [5][6]. - The wholesale business's gross margin plummeted from 7.94% in 2022 to 0.37% in 2024 due to lower selling prices [5][6]. Financial Strategies - To mitigate the impact of declining natural gas prices, New Oriental Holdings engaged in hedging activities, resulting in a financial gain of 27.39 billion yuan in 2023 [5][6]. - The company also realized investment income of 42.77 billion yuan from the sale of a subsidiary's equity [5][6]. Privatization Proposal - New Oriental Holdings plans to privatize New Oriental Energy, with a total transaction value estimated between 595.19 billion and 599.24 billion Hong Kong dollars [7][9]. - The privatization will require issuing up to 2.188 billion shares and paying approximately 183.5 billion Hong Kong dollars in cash, which exceeds the company's available cash resources [9][10]. Debt and Financial Pressure - As of December 31, 2024, New Oriental Holdings had over 300 billion yuan in interest-bearing debt, which could rise to nearly 500 billion yuan if the privatization is financed entirely through loans [9][10]. - The company's financial expenses reached 11.21 billion yuan in 2024, significantly impacting its net profit [10][13]. Shareholder Returns - Despite high debt levels, New Oriental Holdings distributed a total of 31.64 billion yuan in dividends in 2024, representing 70.1% of its net profit [12][15]. - The substantial dividends primarily benefit the controlling shareholder, Wang Yusuo, who holds 72.38% of the company's shares [13][15]. Future Outlook - The successful privatization of New Oriental Energy could enhance operational synergies within the natural gas sector and potentially improve the company's financial performance [15][16]. - The move is expected to increase the personal wealth of Wang Yusuo, as the valuation of assets is likely to rise with the transition to the A-share market [15][16].