Core Insights - New Oriental achieved net revenue of $1.191 billion in FY26Q2, a year-on-year increase of 14.7%, and a net profit attributable to shareholders of $45.45 million, up 42.3% year-on-year [1] - The company has raised its full-year revenue guidance for FY26 to between $5.292 billion and $5.488 billion, reflecting a year-on-year growth of 8% to 12% [2] - The board has approved a cash dividend of $0.12 per share and initiated a $300 million share buyback program, indicating management's confidence in future growth [2] Business Performance - The overseas examination preparation business saw a revenue increase of 4.1% year-on-year, while domestic examination preparation for adults and university students grew by 12.8% year-on-year, contributing significantly to core revenue [1] - New educational businesses reported a revenue increase of 21.6% year-on-year, with non-subject tutoring services operating in approximately 60 cities and attracting around 1.058 million registrations [1] - The "Oriental Selection" segment generated revenue of 2.3 billion RMB in the six months ending November 30, 2025, a year-on-year increase of 5.7%, and turned a profit of 239 million RMB [1] Operational Efficiency - Non-GAAP operating profit for FY26Q2 was $89.13 million, a significant increase of 206.9% year-on-year, with an operating profit margin of 7.5%, up 4.7 percentage points year-on-year [2] - The improvement in profitability is attributed to a focus on core operations, cost reduction measures, and efficiency enhancements through organizational restructuring and AI technology [2] Future Outlook - The company expects overall net revenue for FY26Q3 to be between $1.31 billion and $1.349 billion, reflecting a year-on-year growth of 11% to 14% [2] - Continued revenue growth and ongoing cost optimization efforts are anticipated to further improve operating profits in the future [2] Profit Forecast and Valuation - The profit forecasts for the fiscal years 2026-2028 have been raised to $497 million, $585 million, and $680 million, respectively, with corresponding EPS estimates of $0.31, $0.37, and $0.43 [3] - The current stock price corresponds to a PE ratio of 18x for FY26, 15x for FY27, and 13x for FY28, reflecting the company's position as a leader in the education and training industry [3]

Core Viewpoint - New Oriental reported a net revenue of $1.191 billion for FY26Q2, representing a year-on-year increase of 14.7%, and a net profit attributable to shareholders of $45.45 million, up 42.3% year-on-year [4][5]. Group 1: Business Performance - The company's revenue from overseas examination preparation increased by 4.1% year-on-year, focusing on core exam training needs [5]. - Revenue from domestic examination preparation for adults and college students grew by 12.8% year-on-year, maintaining a steady growth trend [5]. - New business revenue rose by 21.6% year-on-year, with non-subject tutoring services operating in approximately 60 cities and attracting around 1.058 million registrations [5]. - The Oriental Selection segment achieved revenue of 2.3 billion RMB in the six months ending November 30, 2025, a year-on-year increase of 5.7%, and turned a profit with a net profit of 239 million RMB [5]. Group 2: Financial Guidance and Shareholder Returns - The company expects overall net revenue for FY26Q3 to be between $1.31 billion and $1.349 billion, reflecting a year-on-year growth of 11%-14% [5]. - Full-year net revenue guidance for FY26 has been raised to $5.292 billion to $5.488 billion, indicating a year-on-year growth of 8%-12% [5]. - The board has approved a cash dividend of $0.12 per share (equivalent to $1.20 per ADS) and initiated a $300 million share buyback program, demonstrating management's confidence in future growth [5]. Group 3: Operational Efficiency - Non-GAAP operating profit for FY26Q2 was $89.13 million, a significant increase of 206.9% year-on-year, with an operating profit margin of 7.5%, up 4.7 percentage points [7]. - The improvement in profitability is attributed to a focus on core operations, avoiding blind expansion, and optimizing market expenditure [7]. - Cost reduction and efficiency enhancement measures are being implemented in two phases, with the first phase focusing on reducing unnecessary costs and the second phase leveraging organizational restructuring and AI technology [7].

Investment Rating - The report upgrades the investment rating of New Oriental-S (9901.HK) to "Buy" [1] Core Insights - FY26Q2 revenue reached USD 1.191 billion, a year-on-year increase of 14.7%, exceeding previous guidance. Net profit attributable to shareholders was USD 45.45 million, up 42.3% year-on-year, while Non-GAAP net profit attributable to shareholders was USD 72.90 million, reflecting a 68.6% increase year-on-year [5][6] - The company has raised its full-year revenue guidance for FY26 to USD 5.292-5.488 billion, representing a year-on-year growth of 8%-12%, up from the previous guidance of 5%-10% [7] - The company plans to distribute a cash dividend of USD 0.12 per share and has initiated a USD 300 million share buyback program, indicating management's confidence in future growth [7] Revenue Performance - The revenue breakdown for FY26Q2 shows: 1) Overseas business revenue grew by 4.1% year-on-year, focusing on core exam preparation needs 2) Domestic exam preparation for adults and university students saw a 12.8% year-on-year increase, becoming a core revenue support 3) New educational businesses reported a 21.6% year-on-year revenue growth, with significant expansion in non-subject tutoring across approximately 60 cities [6] 4) Dongfang Zhenxuan achieved revenue of RMB 2.3 billion in the six months ending November 30, 2025, a 5.7% year-on-year increase, and turned a profit of RMB 239 million [6] Profitability and Efficiency - FY26Q2 Non-GAAP operating profit was USD 89.13 million, a significant increase of 206.9% year-on-year, with an operating profit margin of 7.5%, up 4.7 percentage points year-on-year [8] - The improvement in profitability is attributed to a focus on core operations, cost reduction measures, and efficiency optimization through organizational restructuring and AI technology [8] Earnings Forecast and Valuation - The earnings forecast for FY26-28 has been revised upwards, with net profit estimates of USD 497 million, USD 585 million, and USD 680 million for FY26, FY27, and FY28 respectively, reflecting increases of 33.8%, 17.7%, and 16.2% [9] - The projected EPS for FY26-28 is USD 0.31, USD 0.37, and USD 0.43, with corresponding P/E ratios of 18x, 15x, and 13x, indicating a strong position in the education and training industry [9][10]

Core Insights - The company reported a 6% year-on-year revenue increase to $1.523 billion for Q1 of FY2026, exceeding expectations by 1% [1] - Adjusted operating profit was approximately $336 million, with an operating margin of 22%, reflecting a 1 percentage point year-on-year expansion [1] - Adjusted net profit attributable to shareholders was $258 million, corresponding to a net profit margin of 17% [1] Performance Highlights - The study abroad-related business performed better than expected, with preparatory and consulting revenues increasing by 1% and 2% year-on-year, compared to a previous forecast of -5% [1] - The college/adult education segment maintained a robust growth rate, with a 14% year-on-year revenue increase [1] - The K9 new business segment saw a 15% year-on-year revenue growth, with learning machines outperforming non-subject areas [1] - Non-subject training enrollment increased by 10% year-on-year to 530,000, while paid users of the intelligent learning system and devices rose by 40% year-on-year to 452,000 [1] - The number of teaching points reached 1,347, an increase of 29 points or 2% from the previous quarter, within the company's expansion pace [1] - The company announced a cash dividend of $190 million and a $300 million share repurchase plan, which is better than previous expectations [1] FY2026 Outlook - Management maintains the FY2026 group revenue guidance, expecting a year-on-year growth rate of 5-10%, with Q2 revenue growth projected between 9-12%, compared to a previous expectation of 9% [2] - Concerns regarding business growth are alleviated by improved retention rates in K12 business and product quality enhancements, which are expected to stabilize revenue growth [2] - The study abroad-related business may remain under pressure, but is expected to benefit from a projected over 25% year-on-year increase in youth language training revenue and expansion in non-English-speaking countries' consulting services [2] - Overall revenue growth for FY2026/27/28 is anticipated to exceed 10%, with a continued trend of profit margin expansion [2] Valuation - The company remains optimistic about the demand and growth prospects for K12 education-related businesses, with steady revenue growth and potential for profit margin optimization [2] - Despite recent impacts on the study abroad-related business, it continues to lead the industry [2] - Using the SOTP valuation method, the company assigns a 15x P/E ratio for K12 business and an 8x P/E ratio for study abroad business, with corresponding profit growth rates of +25% and -7% [2] - The target price has been raised to HKD 55 / USD 71 (EDU US/Buy) from HKD 46 / USD 59, maintaining a buy rating [2]

Company Research: New Oriental (EDU) - Adjusted operating profit margin improved, with Q1 FY26 net revenue at $1.52 billion, up 6.1% year-on-year, slightly exceeding guidance of $1.46 to $1.51 billion[6] - Non-GAAP operating profit reached $336 million, a year-on-year increase of 11.3%, with a Non-GAAP operating profit margin of 22.0%, up 1.0 percentage points[6] - The company plans to return at least 50% of the previous fiscal year's net profit to shareholders, with a total shareholder return plan of $490 million, including $190 million in cash dividends and $300 million in share buybacks[9] Earnings Forecast and Valuation - For FY26Q2, net revenue is expected to be between $1.132 billion and $1.163 billion, representing a year-on-year growth of 9% to 12%[8] - FY26 total net revenue is projected to be between $5.145 billion and $5.39 billion, indicating a growth of 5% to 10%[8] - Target price adjusted to $74.50, maintaining a "Buy" rating, based on a 25x PE for FY26E net profit[10] Company Research: China Shenhua (1088) - For the first three quarters of 2025, revenue was CNY 213.15 billion, down 16.6% year-on-year, with net profit attributable to shareholders at CNY 41.37 billion, a decrease of 13.8%[15] - Coal sales volume decreased by 8.4% to 316.5 million tons, with Q3 revenue at CNY 75.04 billion, down 13.1% year-on-year[16] - Despite challenges, the company maintained a strong cost control, with unit production costs down 3.1% year-on-year[16] Future Outlook and Valuation - Target price set at HKD 47.70, with a "Buy" rating, reflecting a potential upside of 15.1% from the current price[18] - Expected net profit for 2025-2027 is projected at CNY 58.8 billion, CNY 58.7 billion, and CNY 58.9 billion respectively[18] - The company is viewed as a "cash cow" with a generous dividend policy, providing a stable cash return to investors[18]

Investment Rating - The report assigns a "Buy" rating to New Oriental Education Technology (9901 HK) with a target price of HKD 55.00, indicating a potential upside of 19.9% from the current price of HKD 45.88 [4][8][15]. Core Insights - The report highlights that K12 education may accelerate, boosting shareholder returns and enhancing confidence in the company's growth prospects [2]. - Financial forecasts indicate a revenue growth trajectory, with expected revenues of USD 4.9 billion in 2025, growing to USD 6.875 billion by 2028, reflecting a compound annual growth rate (CAGR) of approximately 12% [3][16]. - The net profit is projected to increase from USD 372 million in 2025 to USD 792 million by 2028, with a notable increase in earnings per share (EPS) from USD 0.32 in 2025 to USD 0.45 in 2028 [3][16]. Financial Overview - Revenue (in million USD) is forecasted as follows: - 2024: 4,314 - 2025: 4,900 - 2026E: 5,413 - 2027E: 6,136 - 2028E: 6,875 - Year-on-year growth rates are expected to be 43.9% in 2024, 13.6% in 2025, and gradually declining to 12.0% by 2028 [3][16]. - Net profit (in million USD) projections are: - 2024: 310 - 2025: 372 - 2026E: 428 - 2027E: 481 - 2028E: 792 [3][16]. Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, assigning a price-to-earnings (P/E) ratio of 15x for K12 business and 8x for study abroad business, reflecting expected profit growth rates of +25% and -7% respectively [7][8]. - The target price was adjusted upwards to HKD 55.00 from a previous HKD 46.00, maintaining a "Buy" rating based on the strong demand and growth outlook for K12 education services [7][8].

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 company reported a steady growth in its core business for FY26Q1, with a revenue guidance for Q2 indicating an acceleration in growth compared to Q1 [4][5][6]. Group 1: Financial Performance - For FY26Q1, the company achieved a net revenue of $1.523 billion, representing a year-on-year increase of 6.1% [4][5]. - The net profit attributable to shareholders was $240,700, a decrease of 1.9% year-on-year, while the Non-GAAP net profit was $258 million, down 1.6% year-on-year [4][5]. - The Non-GAAP operating profit for FY26Q1 was $336 million, reflecting an 11.3% increase year-on-year, with an operating profit margin of 22.0%, up 1.0 percentage point [7]. Group 2: Business Segments - The overseas business segment saw a revenue increase of 1.0% for exam preparation and 2.0% for consulting, with growth rates slowing down [5]. - Domestic exam preparation for adults and university students experienced a robust growth of 14.4% year-on-year [5]. - New educational business revenue grew by 15.3% year-on-year, although the growth rate was impacted by intensified competition during the summer [5]. Group 3: Future Outlook - The company expects overall net revenue for FY26Q2 to be between $1.132 billion and $1.163 billion, indicating a year-on-year growth of 9%-12% [6]. - The full-year net revenue guidance for FY26 is maintained at $5.145 billion to $5.390 billion, representing a year-on-year growth of 5%-10% [6]. - A three-year shareholder return plan has been initiated, with at least 50% of the previous fiscal year's net profit allocated for shareholder returns, including a cash dividend of $190 million and a $300 million share buyback plan [6]. Group 4: Operational Efficiency - The company has made significant strides in cost optimization and operational efficiency, which contributed to the improvement in profit margins despite challenges in overseas business [7][8]. - The implementation of an OMO teaching system and increased use of AI technology in the educational ecosystem and internal operations have effectively enhanced overall operational efficiency [7][8].

Core Viewpoint - The report from Everbright Securities indicates a downward revision of New Oriental-S (09901) net profit forecasts for FY26-28 due to intensified industry competition and increased business base, with projected profits of $442 million, $514 million, and $582 million respectively, each down by 8% [1] Group 1: Financial Performance - In FY26Q1, New Oriental achieved net revenue of $1.523 billion, 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 overall net revenue to be between $1.132 billion and $1.163 billion, representing a year-on-year growth of 9%-12% [2] Group 2: Business Segments - In the overseas business segment, exam preparation revenue grew by 1.0% and consulting revenue by 2.0%, with slower growth rates observed [1] - Domestic exam preparation for adults and university students saw a robust revenue increase of 14.4% year-on-year [1] - New educational business revenue grew by 15.3% year-on-year, although growth was impacted by increased competition from low-cost/free classes during the summer [1] Group 3: Operational Efficiency - Non-GAAP operating profit for FY26Q1 was $336 million, reflecting an 11.3% year-on-year increase, with an operating profit margin of 22.0%, up 1.0 percentage points [3] - The improvement in profit margin is attributed to ongoing efforts in cost optimization and operational efficiency [3] - The company is implementing a cautious capacity expansion strategy and enhancing the use of AI technology in its educational ecosystem and internal operations [3] Group 4: Shareholder Returns - The company announced a three-year shareholder return plan, committing to return at least 50% of the previous fiscal year's net profit to shareholders, including a cash dividend of $190 million and a $300 million share buyback plan [2]

Core Viewpoint - Company has adjusted its net profit forecasts for New Oriental-S (09901) for FY26-28 down by 8% to $4.42 billion, $5.14 billion, and $5.82 billion respectively, while maintaining an "Overweight" rating due to strong industry demand despite increased competition [1] Group 1: Financial Performance - In FY26Q1, the company achieved net revenue of $15.23 billion, a year-on-year increase of 6.1%, exceeding previous guidance [2][3] - 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% [2] - The company expects FY26Q2 net revenue to be between $11.32 billion and $11.63 billion, representing a year-on-year growth of 9%-12% [4] Group 2: Business Segments - The overseas examination preparation business saw a revenue increase of 1.0%, while the overseas consulting business grew by 2.0%, indicating a slowdown in growth [3] - Domestic examination preparation for adults and university students experienced a robust revenue growth of 14.4% [3] - New educational business revenue grew by 15.3%, although growth has slowed due to increased competition from low-cost/free classes during the summer [3] Group 3: Operational Efficiency - Non-GAAP operating profit for FY26Q1 was $336 million, an increase of 11.3% year-on-year, with an operating profit margin of 22.0%, up 1.0 percentage point [5] - The improvement in profit margin is attributed to ongoing efforts in cost optimization and operational efficiency [5] - The company is implementing a three-year shareholder return plan, 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 plan [4]