新东方：持续关注教育业务主线，等待利润率修复

Investment Rating - The report assigns an "Outperform" rating to New Oriental (EDU N) for the first time [2][3] Core Views - New Oriental maintains its leading position in the education industry with strong brand recognition and sustained growth momentum in FY24Q4, achieving revenue of $1 14 billion, a 32 1$4 31 billion, up 43 9% YoY [2] - The education business shows robust growth, with adult and college exam preparation revenue increasing by 16 4% YoY and new education business revenue surging by 50 3% YoY in FY24Q4 The company expanded its offline presence, adding 114 new schools and learning centers in the quarter, bringing the total to 1,025, a 27% YoY increase [2] - Overseas study preparation and consulting businesses continue to grow strongly, with YoY increases of 17 7% and 17 3% respectively in FY24Q4 Post-pandemic recovery is expected to drive significant rebound in overseas study demand [2] - East Buy (formerly New Oriental Online) faces profit pressure due to personnel changes, with its contribution to New Oriental's revenue expected to gradually weaken [2] Financial Forecasts and Valuation - Revenue for FY2025 and FY2026 is projected at $5 34 billion and$6 50 billion respectively, with Non-GAAP net income attributable to shareholders estimated at $500 million and$640 million [3] - The company's PE ratio for FY2025 and FY2026 is forecasted at 22X and 18X respectively, compared to an average PE of 15X and 11X for peer companies [3] - Gross margin is expected to remain stable, ranging between 53 0% and 53 8% from FY2025 to FY2027 [4] - ROE is projected to improve from 10 09% in FY2024 to 13 67% in FY2026 before slightly declining to 11 79% in FY2027 [4] Business Performance - The company's total assets stood at $7 53 billion as of May 31, 2024, with net assets of$4 05 billion and net asset per share of $2 28 [1] - Operating cash flow is expected to remain strong, with projections of$561 million, $643 million, and$784 million for FY2025 to FY2027 respectively [5] - Capital expenditures are forecasted at $170 million annually from FY2025 to FY2027 [5] Market Position - New Oriental's market capitalization is$11 3 billion as of August 22, 2024, with a PB ratio of 3 0 [1] - The company's active paying users reached 188,000 in FY24Q4, with its smart learning systems and devices adopted in approximately 60 cities [2]