Investment Rating - The report maintains a "Buy" rating for New Oriental-S (09901.HK) [1] Core Views - New Oriental's FY24Q4 revenue grew by 32.1% year-on-year to $1.14 billion, exceeding performance guidance for four consecutive quarters. The company expects a revenue growth rate of 31% to 34% for FY25Q1, excluding the impact of Dongfang Zhenxuan [6][10] - The education business is experiencing comprehensive growth, with significant progress in study tours and cultural tourism. The overseas exam preparation business saw a 17.7% increase in revenue, while the study abroad consulting business grew by 17.3% [10][14] - The company is accelerating its network expansion, with a total of 1,025 schools and learning centers as of May 31, 2024, and plans to increase the number of outlets by 20% to 25% in FY25 [17][19] Summary by Sections Revenue Growth and Margin Pressure - New Oriental's FY24Q4 revenue reached $1.14 billion, with a gross profit of $590 million, although the gross margin declined by 2 percentage points to 52.3%. Non-GAAP operating profit fell by 54% to $40 million, with a non-GAAP operating margin down by 6 percentage points to 3.2% [10][27] - The company anticipates that the pressure on education business margins will ease, projecting a 2 percentage point increase in operating margin for FY25Q1 [10][27] Market Demand and Network Expansion - The demand in the market remains strong, with the number of new outlets increasing significantly. In FY24, the company opened 277 new outlets, compared to 68 in FY23, and plans to continue this trend [17][19] - Non-academic training business registrations increased by 39% year-on-year, indicating improved utilization rates across outlets [19] Impact of Dongfang Zhenxuan's Subsidiary - The subsidiary "Yuhui Tongxing" is expected to have a limited impact on New Oriental, contributing approximately 2% to revenue and 3% to net profit for FY24 [7][24] - The subsidiary's GMV is estimated to account for about 22% of Dongfang Zhenxuan's total GMV [24] Earnings Forecast and Valuation - The core valuation and market potential of New Oriental primarily depend on its education business. The report adjusts the FY25-26 non-GAAP net profit estimates to $500 million and $610 million, respectively, with a projected net profit of $720 million for FY27 [27] - The current stock price corresponds to a PE ratio of 20, 16, and 14 times for FY25-27 non-GAAP net profits [27]
新东方-S：FY24Q4季报点评：教育业务增长强劲，与辉同行出表影响有限