Core Insights - New Oriental's 1QFY26 revenue reached $1.523 billion, a year-on-year increase of 6.1%, with education business revenue (including cultural tourism) at $1.366 billion, up 8.5% year-on-year [1] - Non-GAAP operating profit was $336 million, reflecting an 11.3% year-on-year growth, with a Non-GAAP operating profit margin of 22%, expanding by 1.1 percentage points year-on-year [1] - The company announced a shareholder return plan, distributing $190 million in cash dividends and repurchasing up to $300 million in stock [1] Education Business Recovery - The revenue from overseas examination training and consulting reached $328 million, growing by 1% year-on-year, but the growth rate slowed by 19 percentage points compared to the same period last year [2] - The company is adjusting its 1-on-1 training model to a 1-to-many format to lower class prices and is expanding its youth overseas examination training services to enhance growth resilience [2] - New business segments, including K9 non-academic training and learning machines, maintained high growth, with revenue increasing by 15% to $403 million [2] Operating Profit Margin Improvement - Despite a slowdown in high-margin overseas study business growth, the increase in the profit margin of quality education business offset this decline [3] - The company implemented measures such as workforce reduction and cost control, with sales expenses at $200 million, up 3.6% year-on-year, and administrative expenses at $370 million, up 2.4% year-on-year, both growing slower than revenue [3] - The Non-GAAP operating profit margin expanded by 1 percentage point to 22%, continuing the trend from 4QFY25 [3] Rating and Future Guidance - The company projects a 2QFY26 revenue growth of 9-12% year-on-year, exceeding the full-year guidance of 5-10% growth [4] - The education business growth is expected to recover, driven by excellent teaching reputation, with a forecasted increase in renewal rates for regular classes [4] - Revenue forecasts for FY26-FY28 have been raised to $5.38 billion, $5.98 billion, and $6.73 billion, respectively, with Non-GAAP net profit estimates adjusted to $555 million, $610 million, and $679 million [4]

Core Insights - The company reported better-than-expected performance for FY26Q1, with a revenue growth of 6.1% year-on-year, surpassing the previous guidance of 2%-5% [1] - The company anticipates a revenue growth of 9%-12% for FY26Q2 and maintains an annual growth target of 5%-10% [1] - The out-of-country business showed unexpected improvement, with a 1% growth in exam preparation and a 2% growth in study abroad consulting, indicating a recovery from previous pessimistic forecasts [1] Revenue and Growth Indicators - Deferred revenue increased by 10% year-on-year, and the renewal rate improved across all segments, suggesting robust growth [1] - The K12 business is expected to accelerate significantly in FY26Q2, with K9 growth around 20% and high school showing double-digit growth, validating the strategy of prioritizing product quality [2] - The active paid users in the OMO business reached 452,000, indicating potential for user retention and scalability [2] Shareholder Returns and Financial Health - The company announced a $190 million dividend and a $300 million buyback plan, totaling approximately $490 million, which represents over 130% of FY25 net profit [3] - Cash and cash equivalents stood at $5.03 billion as of FY26Q1, allowing for shareholder returns while maintaining strategic investments [3] - The combination of regular dividends and ongoing buybacks reflects a mature approach to shareholder returns, with a commitment to high payout ratios [3] Profitability and Cost Management - The Non-GAAP operating profit margin improved to 22.0%, driven by better resource utilization, operational leverage, and effective cost control [4] - The company expects further margin expansion in FY26Q2, with a focus on improving profitability in the core business [4] - The shift in the out-of-country business from being a drag on profits to reducing losses is a positive development [4] Earnings Forecast - The company maintains its Non-GAAP net profit forecasts for FY2026-2028 at $580 million, $630 million, and $690 million, respectively [4] - The current stock price corresponds to a PE ratio of 17, 15, and 14 for FY2026-2028, indicating a favorable valuation [4]

Core Insights - The latest quarterly financial reports from two major Chinese education companies, TAL Education (好未来) and New Oriental (新东方), reveal divergent growth paths and strategic focuses in the post-restructuring phase of the education industry [3][4]. Financial Performance - TAL Education reported a net income of $861 million for Q2 FY2026, marking a 39.1% year-over-year increase, while New Oriental's Q1 FY2026 net income was $1.523 billion, reflecting a 6.1% growth [1][2]. - TAL's operating profit reached $96.1 million with an operating margin of 11.2%, whereas New Oriental achieved an operating profit of $311 million and a margin of 20.4% [2][9]. - TAL's net profit surged by 116.1% to $124 million, while New Oriental's net profit slightly declined by 1.9% to $241 million [2][9]. Growth Strategies - Both companies are rapidly advancing in educational technology, with TAL emphasizing smart learning devices and digital teaching systems as key growth drivers [5][6]. - TAL's business model is shifting towards a subscription-based approach, aiming to extend the learning lifecycle beyond traditional classroom settings [7]. - New Oriental is focusing on a diversified revenue structure, with significant growth in adult and university exam services, as well as non-academic education [8]. Profitability and Efficiency - New Oriental maintains the highest profitability in the industry, with a focus on cost control and efficiency, while TAL is experiencing rapid profit growth driven by technology and product innovation [9][10]. - TAL's profit margin has doubled year-over-year, indicating a shift towards a technology-driven operational leverage model [10]. Capital Management - New Oriental exhibits a robust capital structure with over $5 billion in cash and equivalents, committing to return at least 50% of its net profit to shareholders [11][12]. - In contrast, TAL is investing heavily in technology and market expansion, reflecting a growth-oriented capital strategy [11][12]. Strategic Vision - TAL is positioning itself as a technology company, focusing on integrating quality educational content with smart devices, while New Oriental emphasizes brand trust and quality educational services [13][14]. - Both companies are addressing the challenge of redefining education in the era of AI and digitalization, albeit through different strategic lenses [14].

Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [5]. Core Insights - The company reported Q2 FY2026 revenue of $861 million, a 39% year-over-year increase, and a net profit of $124 million, up 116% year-over-year [2][3]. - The strong performance is driven by both educational services and hardware sales, with educational services showing stable average selling prices (ASP) and hardware sales benefiting from the launch of new models [3]. - The deferred revenue balance increased by 59% year-over-year to $823 million, indicating positive enrollment trends for the upcoming fall semester [3]. Revenue and Profit Analysis - For FY2026, the company expects revenues of $3.013 billion, with a growth rate of 34%, and net profits of $163 million, reflecting a 93% increase [5][10]. - Non-GAAP operating profit for Q2 FY2026 was $108 million, a 67% increase year-over-year, with an operating margin of 12.5%, up 2.1 percentage points [3][10]. - The hardware segment is currently in an investment phase, focusing on operational metrics rather than immediate profitability [3]. Share Buyback Program - The company announced a new share repurchase plan on July 28, 2025, intending to buy back up to $600 million worth of stock over the next 12 months [4]. - From July 31 to October 29, 2025, the company repurchased approximately $135 million worth of shares, totaling around 4.2 million shares [4]. Financial Forecast - The company projects revenues for FY2026 to FY2028 at $3.013 billion, $3.892 billion, and $4.804 billion, respectively, with corresponding net profits of $163 million, $270 million, and $404 million [5][10]. - The expected P/E ratios for FY2026, FY2027, and FY2028 are 48x, 29x, and 19x, respectively [5].

Investment Rating - The report maintains a "Cautious Recommendation" rating for the company [6]. Core Views - The company has shown significant performance improvement with a revenue of 1.081 billion yuan for the first nine months of 2025, representing a year-on-year growth of 12.03%. The net profit attributable to shareholders reached 46 million yuan, up 141.11% year-on-year, and the non-recurring net profit increased by 578.42% to 39 million yuan [1]. - The company has effectively controlled expenses, with sales and management expenses growing by 2.64% and 14.53% respectively, leading to a decrease in the expense ratio [1]. - The company’s employee stock ownership plan has high performance conditions, requiring a net profit margin of approximately 7.5% to meet the exercise conditions, indicating that the company needs to maintain strong growth in the fourth quarter to meet these targets [2]. - The company has significantly reduced its debt ratio, with total assets and liabilities decreasing by 5.68% and 9.64% respectively, resulting in a debt ratio of 86.05%, down 6.34 percentage points from the beginning of the year [3]. - The company’s cash flow requires improvement, as the cash collection ratio has decreased by 12.67 percentage points year-on-year [3]. - The company’s gross profit margin has improved to 46.10%, up 1.98 percentage points year-on-year, indicating enhanced profitability [3]. - Future revenue projections for 2025-2027 are set at 1.414 billion yuan, 1.697 billion yuan, and 2.002 billion yuan respectively, with corresponding EPS estimates of 0.24 yuan, 0.34 yuan, and 0.42 yuan [4]. Summary by Sections Financial Performance - For the first nine months of 2025, the company achieved a revenue of 1.081 billion yuan, a 12.03% increase year-on-year, with a quarterly revenue of 449 million yuan in Q3, marking a 12.31% year-on-year increase and a 38.93% quarter-on-quarter increase [1]. - The net profit attributable to shareholders was 46 million yuan, a 141.11% increase year-on-year, with an EPS of 0.17 yuan, up 133.29% [1]. Expense Management - The company has effectively controlled its expenses, with sales and management expenses at 205 million yuan and 216 million yuan respectively, showing modest growth rates [1]. Debt and Cash Flow - As of September 2025, the company’s total assets and liabilities were 1.551 billion yuan and 1.335 billion yuan, respectively, with a significant reduction in the debt ratio [3]. - The cash collection ratio was 98.53%, reflecting a decline in cash flow efficiency [3]. Profitability - The gross profit margin improved to 46.10%, indicating a positive trend in profitability [3]. Future Outlook - The company is expected to focus on high-quality development and profit growth, with revenue projections indicating a strong upward trend in the coming years [4].

Core Viewpoint - The company, TAL Education Group, reported significant growth in its financial performance for the second quarter of fiscal year 2026, indicating a strong recovery and positive momentum in its core business segments. Financial Performance Summary - For the second quarter of fiscal year 2026, net revenue reached $861.35 million, up from $619.36 million in the same period last year, representing a 39.1% increase [2][7]. - Operating profit for the same quarter was $96.10 million, compared to $47.62 million in the previous year, marking a 101.8% increase [2][7]. - Non-GAAP operating profit (excluding stock-based compensation) was $107.85 million, up from $64.52 million, reflecting a 67.2% increase [2][7]. - The net profit attributable to TAL was $124.08 million, significantly higher than $57.43 million in the prior year, showing a 116.1% increase [3][7]. - Non-GAAP net profit attributable to TAL was $135.84 million, compared to $74.33 million, an increase of 82.7% [3][7]. Half-Year Performance Summary - For the six months ending August 31, 2025, net revenue totaled $1.44 billion, up from $1.03 billion year-over-year, a growth of 39.0% [4][9]. - Operating profit for the half-year was $110.44 million, a substantial increase from $30.29 million, representing a 264.6% rise [5][9]. - Non-GAAP operating profit for the half-year was $132.96 million, compared to $65.40 million, reflecting a 103.3% increase [5][9]. - The net profit attributable to TAL for the half-year was $155.37 million, up from $68.83 million, a 125.7% increase [6][9]. - Non-GAAP net profit attributable to TAL for the half-year was $177.88 million, compared to $103.94 million, an increase of 71.1% [6][9]. Earnings Per ADS - Basic and diluted net profit per ADS for the second quarter were $0.22 and $0.21, respectively, compared to $0.09 in the previous year, marking increases of 129.6% and 130.0% [3][7]. - Non-GAAP basic and diluted net profit per ADS were both $0.24, up from $0.12, reflecting increases of 94.2% and 94.6% [8]. Strategic Focus - The company's President and CFO, Peng Zhuangzhuang, emphasized progress in core business areas, with revenue growth in quality courses and learning devices, supported by ongoing investments in user experience, technology, and educational innovation [9]. - The company aims to prioritize resources in core areas critical for long-term development, focusing on providing innovative learning solutions and quality educational content to a broader audience [9].

Core Viewpoint - On October 30, 2023, Angli Education announced its plan to acquire 100% equity of Shanghai Leyou Yutu International Travel Agency Co., Ltd. from Shanghai Xianghong Cultural Tourism Development Group Co., Ltd. for a transaction price of 38 million yuan [1] Group 1 - The acquisition is part of Angli Education's strategic planning and development needs for its silver-haired business [1] - The transaction aims to enrich the service content and product matrix of the silver-haired business, solidifying the company's second growth curve [1] - This move is intended to support the high-quality implementation and sustainable development of the silver-haired strategy [1]

Core Viewpoint - The company, Angli Education, is acquiring 100% equity of Shanghai Leyou from Shanghai Xianghong for a total transaction price of 38 million RMB to enhance its silver-haired business services and product offerings, thereby solidifying its second growth curve and supporting the high-quality implementation and sustainable development of its silver-haired strategy [1] Group 1 - The acquisition is aimed at enriching the service content and product matrix of the silver-haired business [1] - The total transaction price is structured in two phases: 35 million RMB for the first phase and 3 million RMB for the second phase [1] - Shanghai Xianghong will manage the liquidity of Shanghai Leyou's funds and will repay its financial obligations to Shanghai Leyou after receiving the first phase of the payment [1]

Investment Rating - The report maintains a "Buy" rating for the education sector, particularly highlighting New Oriental's performance and potential recovery in overseas education [4]. Core Insights - New Oriental's revenue for Q1 FY26 reached $1.523 billion, a year-on-year increase of 6.1%, with the education segment (including cultural tourism) generating $1.366 billion, up 8.5% year-on-year [9][10]. - The report indicates that the growth rate of overseas education services has bottomed out, with expectations for recovery in the remaining quarters of FY26 [10]. - The company has announced a shareholder return plan, distributing $190 million in cash dividends and repurchasing up to $300 million in stock [9]. Summary by Sections 1. Overseas Education - The overseas education business has shown signs of recovery, with Q1 FY26 revenue from overseas exam training and consulting at $328 million, a 1% increase year-on-year, although the growth rate has slowed by 19 percentage points compared to the previous year [10]. - New business segments, including K9 non-academic training and learning machines, have maintained high growth, with Q1 revenue increasing by 15% to $403 million [10][11]. - The number of teaching locations increased to 1,347, representing a 24% year-on-year growth [10]. 2. Profitability Improvement - Despite a slowdown in high-margin study abroad services, the profitability of the literacy business has improved, offsetting the decline [11]. - Q1 FY26 Non-GAAP operating profit was $336 million, up 11.3% year-on-year, with an operating profit margin of 22%, expanding by 1 percentage point [11]. 3. Market Performance - The education index fell by 3.7% during the week, underperforming the Hang Seng Index by 4.3 percentage points, with a year-to-date increase of 19.3% [8]. - The report suggests a focus on Chinese education companies, particularly New Oriental, TAL Education, and others, as they show strong enrollment data for the fall semester [14]. 4. Key Company Updates - MGM China reported a record EBITDA of HKD 2.37 billion for Q3 2025, with net revenue of HKD 8.5 billion, a 17% year-on-year increase [16]. - The company continues to focus on high-end gaming and has seen significant growth in its market share [16].

Core Insights - The company reported strong financial growth in its Q2 FY2026 results, with significant increases in revenue and profitability [2] - The company continues to innovate in user experience, technology, and educational models, focusing on quality courses and smart learning devices as key growth drivers [1][2] Financial Performance - For Q2 FY2026, the company achieved a net revenue of $861 million, a 39.2% increase from $619 million in the same period last year [2] - Operating profit reached $96.1 million, up 101.8% year-over-year from $47.6 million [2] - Net profit attributable to the company was $124 million, a 116% increase from $57.4 million in the previous year [2] - Non-GAAP net profit was $136 million, reflecting an 83% year-over-year growth [2] Cash Position - As of August 31, 2025, the company held cash and cash equivalents totaling $3.249 billion, down from $3.618 billion as of February 28, 2025, primarily due to strategic investments and operational expenditures [3] - The company emphasizes prioritizing resources in core areas critical for long-term development [3]