Workflow
新东方：Soft consumption weighs on demand for high-ASP businesses; intact long-term outlook
EDUNEW ORIENTAL(EDU) 招银国际·2024-10-24 01:41

Investment Rating - The report maintains a "BUY" rating for New Oriental, with a target price of US87.00,downfromtheprevioustargetofUS87.00, down from the previous target of US95.00, indicating a potential upside of 29.6% from the current price of US67.13[4][2].CoreInsights−NewOrientalreportedanetrevenuegrowthof30.567.13 [4][2]. Core Insights - New Oriental reported a net revenue growth of 30.5% YoY to US1,435 million in 1QFY25, aligning with estimates. Non-GAAP net income increased by 39.8% YoY to US265million,drivenbyimprovedoperatingmarginsincoreeducationalservices[2].−Thecompanyanticipatesarevenuegrowthof25−28265 million, driven by improved operating margins in core educational services [2]. - The company anticipates a revenue growth of 25-28% YoY for 2QFY25, with expectations of reaccelerated growth in 3Q and 4Q, maintaining a full-year growth outlook of approximately 30% YoY for FY25 [2]. - The report highlights strong performance in core educational businesses, with overseas-related revenue up 19% YoY and new educational initiatives growing by 50% YoY in 1QFY25 [2]. - The tourism business showed significant growth, with a 221% YoY increase in revenue from study tours and research camps for K12 and university students [2]. Financial Summary - For FY25E, total revenue is projected at US5,216 million, with adjusted net profit expected to reach US516.9million.TheadjustedEPSisforecastedatUS516.9 million. The adjusted EPS is forecasted at US3.12 [3][11]. - The report indicates a gross margin of 54.3% and an operating margin of 9.7% for FY25E, with expectations for gradual improvement in profitability metrics over the following years [6][14]. - The company’s total assets are projected to grow from US7,532millioninFY24toUS7,532 million in FY24 to US10,634 million by FY27, reflecting a strong balance sheet position [12]. Valuation Methodology - The valuation employs a sum-of-the-parts (SOTP) approach, attributing US83.4milliontotheeducationalandconsultingbusiness,US83.4 million to the educational and consulting business, US1.0 million to East Buy, and US$2.6 million to tourism and other ventures [8][9]. - The educational and consulting segment is valued at a premium PE of 27x FY25E, reflecting New Oriental's leadership in the educational services market in China [8].