Investment Rating - The report maintains a "Buy" rating for the overseas education sector, particularly highlighting New Oriental's revenue growth acceleration driven by its strong reputation [4]. Core Insights - The overseas education business has reached a bottom in growth, with New Oriental's revenue for Q1 FY26 at $1.523 billion, a year-on-year increase of 6.1%. The education segment (including cultural tourism) generated $1.366 billion, up 8.5% year-on-year [9][10]. - New Oriental's Non-GAAP operating profit was $336 million, reflecting an 11.3% increase, with an operating margin of 22%, expanding by 1.1 percentage points year-on-year [9][11]. - The report anticipates a recovery in the overseas examination training and consulting business, projecting growth to resume in the remaining quarters of FY26 [10]. Summary by Sections Overseas Education - The overseas education sector is showing signs of recovery, with New Oriental's Q1 FY26 revenue growth driven by adjustments in service offerings and a focus on high-quality education [9][10]. - The company has adapted its one-on-one tutoring model to a group format to lower costs and has expanded its youth examination training services, which has contributed to resilience in growth [10]. - New business segments, including K9 non-academic training and learning devices, have maintained high growth, with Q1 revenue increasing by 15% to $403 million [10]. Financial Performance - Despite a slowdown in high-margin study abroad services, improvements in the profitability of other segments have offset this decline. Sales and administrative expenses grew at a slower rate than revenue, indicating effective cost control [11]. - The report highlights a shareholder return plan, including a cash dividend of $190 million and a stock buyback of up to $300 million [9]. Market Trends - The education index has underperformed compared to the Hang Seng Index, with a year-to-date increase of 19.3%, lagging behind the index by 8.9 percentage points [8]. - The report suggests a positive outlook for the sector, particularly for companies with strong brand recognition and quality offerings, such as New Oriental and others in the Chinese education sector [14].

Core Viewpoint - TAL Education Group, a provider of intelligent learning solutions in China, reported its unaudited financial results for the second quarter of fiscal year 2026, ending August 31, 2025, showing significant growth in revenue and profits [1]. Financial Performance Summary - For the second quarter of fiscal year 2026, net revenue reached $861.35 million, a 39.1% increase from $619.36 million in the same period last year [4]. - Operating profit for the same quarter was $96.10 million, up from $47.62 million year-over-year [4]. - Non-GAAP operating profit, excluding stock-based compensation, was $108 million, compared to $64.52 million in the previous year [4]. - Net profit attributable to TAL was $124.08 million, a substantial increase from $57.43 million year-over-year [5]. - Non-GAAP net profit attributable to TAL, excluding stock-based compensation, was $135.84 million, compared to $74.33 million in the same period last year [5]. Half-Year Performance Summary - For the six months ending August 31, 2025, net revenue totaled $1.44 billion, a 39.0% increase from $1.03 billion in the same period last year [6]. - Operating profit for the half-year was $110.44 million, a significant rise from $30.29 million year-over-year [6]. - Non-GAAP operating profit for the half-year was $132.96 million, compared to $65.40 million in the previous year [6]. - Net profit attributable to TAL for the half-year was $155.37 million, up from $68.83 million year-over-year [6]. - Non-GAAP net profit attributable to TAL for the half-year was $177.88 million, compared to $103.94 million in the same period last year [6]. Management Commentary - The President and CFO of TAL stated that the core business made progress, with revenue from quality courses and learning devices showing both sequential and year-over-year growth [7]. - The company emphasized its commitment to investing in user experience, technology, and educational model innovation to support business development [7]. - From a strategic perspective, TAL plans to prioritize resources in core areas important for long-term development, aiming to provide innovative learning solutions and quality educational content to a broader audience [7].

Core Insights - The company achieved a revenue of $1.523 billion in Q1 FY2026, representing a year-on-year increase of 6.1%, exceeding the previous forecast range of 5% [1] - Non-GAAP operating profit reached $336 million, up 11.3%, with a Non-GAAP operating margin improvement of 1 percentage point to 22% [1] - Deferred revenue stood at $1.907 billion, reflecting a 10% increase [1] Business Performance - The study abroad and university student segments outperformed expectations, while K12 business outlook remains positive [2] - K9 education new business revenue grew by 15%, with non-subject training participants at 530,000, up 10%, and active paid users for learning machines at 452,000, up 40% [2] - High school training revenue increased by 7%, impacted by scheduling and regional discounts; K12 business revenue is expected to accelerate in FY26Q2 [2] - Study abroad exam preparation and consulting revenue grew by 1% and 2% respectively, benefiting from improved external conditions [2] - University student business revenue increased by 14%, surpassing the previous growth expectation of 10% [2] Future Outlook - For FY2026Q2, the company expects net revenue growth of 9%-12%, maintaining a full-year guidance of 5%-10% growth [3] - A three-year shareholder return plan was announced, with plans to distribute approximately $190 million in cash dividends and a share buyback plan of up to $300 million [3] - The shareholder return plan corresponds to an estimated shareholder return rate of about 5.1% based on the latest market capitalization [3] Investment Recommendation - The company maintains a "better than market" rating due to its clear quality enhancement strategy, positive performance outlook, and attractive shareholder returns [4] - The core strategy of "enhancing capabilities and quality" aligns with the industry's shift towards prioritizing quality post-pandemic, reflected in the steady recovery of adjusted operating profit margins and improved K12 student retention rates [4] - Forecasts for adjusted net profits for FY2026-2028 are $430 million, $480 million, and $530 million, with corresponding P/E ratios of 23, 20, and 18 [4]

Core Insights - New Oriental achieved net revenue of $1.523 billion in FY26Q1, a year-on-year increase of 6.1%, exceeding previous guidance [1] - The company reported a net profit attributable to shareholders of $240,700, a decrease of 1.9% year-on-year, while Non-GAAP net profit was $258 million, down 1.6% [1] - The company expects FY26Q2 net revenue to be between $1.132 billion and $1.163 billion, representing a year-on-year growth of 9%-12% [2] Business Performance - The overseas business segment saw revenue growth of 1.0% for exam preparation and 2.0% for consulting, with slower growth rates [1] - Domestic exam preparation for adults and college students grew by 14.4%, indicating strong performance [1] - New educational business revenue increased by 15.3%, although growth was impacted by intensified competition during the summer [1] Financial Guidance and Shareholder Returns - The company maintains its full-year net revenue guidance for FY26 at $5.145 billion to $5.390 billion, reflecting a year-on-year growth of 5%-10% [2] - A three-year shareholder return plan has been initiated, committing at least 50% of the previous fiscal year's net profit to shareholder returns, including a $190 million cash dividend and a $300 million share buyback [2] Operational Efficiency - Non-GAAP operating profit for FY26Q1 was $336 million, up 11.3% year-on-year, with an operating profit margin of 22.0%, an increase of 1.0 percentage points [2] - The improvement in profit margins is attributed to ongoing cost optimization and enhanced operational efficiency [2] - The company is focusing on prudent capacity expansion, advancing the OMO teaching system, and increasing the application of AI technology to improve overall operational efficiency [2] Profit Forecast and Valuation - The company has adjusted its net profit forecasts for FY26-28 to $442 million, $514 million, and $582 million, respectively, each down by 8% [3] - Corresponding EPS for FY26-28 is projected at $0.28, $0.33, and $0.37, with current stock prices reflecting PE ratios of 22x, 19x, and 16x [3] - The company remains a leader in the education and training industry, with strong demand persisting [3]

Core Viewpoint - The report highlights that Zhonggong Education has achieved a net profit growth of 39.34% quarter-on-quarter in Q3 2025, marking seven consecutive quarters of profitability, indicating a recovery in the company's earnings capacity [1][2]. Financial Performance - For the first three quarters of 2025, the company reported a total revenue of 1.657 billion yuan, with Q3 revenue reaching 502 million yuan [1]. - The net profit attributable to shareholders in Q3 was 30.3621 million yuan, reflecting a 39.34% increase compared to Q2 [1]. - The total operating costs for Q3 were 474 million yuan, a decrease of 15.72% year-on-year and a 13.98% reduction quarter-on-quarter [1]. - Sales expenses in Q3 amounted to 114 million yuan, down 29.31% year-on-year, attributed to organizational adjustments and digital transformation efforts [1]. Operational Efficiency - The company has optimized its operating efficiency and product models, contributing to a positive net profit for seven consecutive quarters, indicating a sustained upward trend in profitability [1]. - The operating cash flow has been positive for three consecutive quarters, showing a gradual recovery in the company's cash-generating ability [1]. New Business Development - The new business segment has shown strong growth, with the AI employment learning machine completing upgrades and achieving cumulative sales of over 10,000 units, becoming a mainstream choice for candidates [2]. - With the upcoming 2026 national examination, the company anticipates a new business cycle that may further enhance profitability, as the number of approved candidates for the national exam has surpassed 3.7 million, setting a new historical peak [2]. - The average competition ratio for the national exam has increased from 76:1 to 98:1, indicating a rising trend that may positively impact the provincial exams and other related assessments [2].

Core Insights - The company reported a net revenue of $861 million for the second quarter of fiscal year 2026, representing a year-over-year growth of 39.1% [1] - Operating profit reached $96.1 million, showing a significant increase of 101.8% year-over-year [1] - Net profit attributable to the company was $124 million, which is a year-over-year growth of 116.1% [1] Business Performance - The core business of the company made progress during the quarter, with revenue from quality courses and learning equipment both experiencing sequential and year-over-year growth [1] - Continuous investment in user experience, technology, and educational model innovation has been a key driver for business development [1]

Core Viewpoint - New Oriental (EDU.US) reported a 6.1% year-over-year increase in net revenue for Q1, reaching $1.523 billion, exceeding expectations, indicating a potential end to the challenging downturn cycle for FY2025 [1] Financial Performance - The adjusted performance of New Oriental is projected to have over a 10% upward adjustment compared to Bloomberg's expectations, suggesting a return to profitability growth [1] - The company's capital return rate has surpassed 5%, reflecting strong financial health [1] Business Segments - The K12 business segment is expected to accelerate growth by the end of November 2026, driven by a more favorable competitive environment, strong customer retention rates, and improvements in the Xi'an market [1] - The overseas business is also showing positive trends, supported by an increase in child registrations and robust performance in Asian markets, with management noting consistent quarterly improvements since May [1] Analyst Ratings - Morgan Stanley has raised New Oriental's target price from $60.4 to $68.8, maintaining an "outperform" rating [1]

Core Viewpoint - Guosheng Securities reports that New Oriental Education's business fundamentals are stable, with positive guidance on K12 education business and profit margins starting from Q2 [1] Financial Performance - For FY2026 Q1 (June 1, 2025 - August 31, 2025), the company achieved net revenue of $1.523 billion, a year-over-year increase of 6.1%, exceeding the previous quarter's guidance of $1.464 to $1.507 billion [1] - Operating profit for the same period was $311 million, reflecting a year-over-year increase of 6.0% [1] - The net profit attributable to shareholders was $241 million, a year-over-year decrease of 1.9%, while Non-GAAP net profit attributable to shareholders was $258 million, a decrease of 1.6% [1] Future Outlook - The company has adjusted its profit forecast, expecting Non-GAAP net profit attributable to shareholders to reach $568 million, $642 million, and $707 million for FY2026-2028, representing year-over-year growth of 9.7%, 13.2%, and 10.0% respectively [1] - Starting from FY26, the company plans to allocate no less than 50% of its net profit attributable to shareholders for shareholder returns, as part of a three-year shareholder return plan [1] Shareholder Returns - On July 29, the company announced a plan to distribute approximately $190 million in cash dividends and approved a share repurchase plan of up to $300 million within the next 12 months [1]

Core Viewpoint - Morgan Stanley has raised the target price for New Oriental (09901.HK) by 12.8% to HKD 53, maintaining an "Overweight" rating, indicating a positive outlook for the company's performance and growth potential [1] Financial Performance - The adjusted company performance shows over 10% growth potential, suggesting the end of the downturn cycle in the fiscal year 2025 [1] - Despite a decline in U.S. stock prices, Morgan Stanley remains optimistic about New Oriental's return to profitability and growth trajectory [1] Capital Returns - The capital return rate for New Oriental has exceeded 5%, reflecting strong financial health and investor confidence [1]

Core Viewpoint - Morgan Stanley has raised the target price for New Oriental (9901.HK) by 12.8%, from HKD 47 to HKD 53, while maintaining an "Overweight" rating, indicating a positive outlook for the company [1] Financial Performance - The adjusted performance of New Oriental is expected to exceed Bloomberg's estimates by over 10%, suggesting the end of a challenging downturn for the fiscal year 2025 [1] - The company's capital return rate is strong, currently exceeding 5% [1] Market Reaction - Despite an initial decline in the company's stock price in the US market, Morgan Stanley believes that New Oriental is on the path to profitability growth with a clear outlook [1]