Investment Rating - The report maintains a Buy rating for New Oriental Education & Technology Group (9901 HK) with a target price of HKD 80.00, implying a potential upside of 25.2% [2][4] Core Views - New Oriental continues to maintain its leading position in international education, with steady expansion in its education business [2] - The company's education business is expected to achieve a 24% CAGR in revenue from FY2024 to FY2027, driven by ongoing margin optimization [2] - The offline teaching center expansion is progressing well, with a 6% QoQ increase in Q1 FY2025, adding 60+ new centers, primarily in Tier 1 and New Tier 1 cities [2][5] - The education business is valued at 20x P/E for the 12 months ending February 2026, excluding contributions from Dongfang Zhenxuan [2] Financial Performance and Forecasts Q1 FY2025 Preview - Total revenue is expected to grow 33% YoY to USD 1.46 billion, in line with the company's guidance of 31-34% [3] - Non-Dongfang Zhenxuan revenue is projected to increase 33% YoY to USD 1.247 billion [3] - Adjusted operating profit is estimated at USD 320 million, with an operating margin of 21.9%, driven by a 2 percentage point improvement in non-Dongfang Zhenxuan business margins [3] - Adjusted net profit is forecasted at USD 259 million, with a net margin of 17.7% [3] Segment Performance - Overseas test preparation revenue is expected to grow 21% YoY, high school revenue 27%, university/adult education 26%, and new businesses 52% [3] - Gross margin is projected to improve to 58%, up 2.5 percentage points from the previous forecast [4] Long-Term Forecasts - Revenue is expected to grow from USD 4.314 billion in FY2024 to USD 7.646 billion in FY2027, with a 24% CAGR [6] - Adjusted operating profit is forecasted to increase from USD 473 million in FY2024 to USD 1.196 billion in FY2027 [6] - Adjusted net profit is projected to rise from USD 381 million in FY2024 to USD 1.043 billion in FY2027 [6] Industry and Peer Comparison - The report covers multiple companies in the internet and education sectors, with Buy ratings for peers like TAL Education (TAL US) and Gaotu Techedu (GOTU US) [8] - New Oriental's valuation and growth prospects are highlighted as favorable compared to its peers in the education sector [8]
新东方-S：教育业务仍稳健，利润率优化应可持续