Investment Rating - The report assigns a "Buy" rating for New Oriental Education Technology (9901 HK) with a target price of HKD 89.00, indicating a potential upside of 25.5% from the current closing price of HKD 70.90 [1][7]. Core Insights - In Q3 FY2024, New Oriental's revenue reached USD 1.207 billion, a year-on-year increase of 60%, driven by growth in new educational businesses and self-operated sales from Dongfang Zhenxuan [1]. - Adjusted operating profit was USD 140 million with an operating margin of 12%, remaining stable year-on-year, while adjusted net profit was USD 105 million, below expectations due to expansion costs and discounts on self-operated products [1][2]. - The company has increased its teaching points to 911, with a management forecast of over 30% expansion for FY2024, up from the previous 20% [1][2]. Financial Performance Summary - Revenue for Q3 FY2024 was USD 1.207 billion, exceeding Bloomberg consensus estimates of USD 1.088 billion [1][4]. - The traditional business segments, including study abroad consulting and exam preparation, saw revenue growth of 53% and 26% respectively, contributing 22% to total revenue [1][4]. - New business revenue grew by 73%, contributing approximately 20% to total revenue, with non-academic training enrollment increasing by 63% to 355,000 students [1][4]. - The gross margin for the education business improved by 2.8 percentage points year-on-year, while the operating margin increased by 8 percentage points [1][2]. Financial Forecast and Valuation - For Q4 FY2024, revenue is expected to grow by 38% to USD 1.184 billion, with an anticipated operating margin decline of 3 percentage points to 6% due to increased investments in Dongfang Zhenxuan and seasonal business impacts [2][5]. - The report projects a revenue increase of 30% for FY2025, with continued optimization of profit margins [2][5]. - The target price adjustment reflects a valuation of 25 times the education business's earnings, with a projected profit growth rate of 48% for FY2025 [2][5].
2024财年3季度：东方甄选投入加大，教育业务运营利润率持续改善