Core Viewpoint - New Oriental Education Technology (EDU.US; 9901.HK) has shown significant improvement in its financial performance, with a notable increase in operating profit and revenue growth, indicating a potential recovery in the education sector despite regulatory challenges [2][4]. Financial Performance - For the second quarter of fiscal year 2026, New Oriental reported revenue of $1.191 billion, a year-on-year increase of 14.7% [4]. - Operating profit reached $66.3 million, reflecting a substantial year-on-year increase of 244.4% [4]. - Net profit attributable to shareholders was $45.5 million, marking a 42.3% increase compared to the previous year [4]. Profitability Improvement - Despite a 1.1% decrease in sales and marketing expenses to $194 million, overall operating costs rose by 10.4% year-on-year [5]. - General and administrative expenses increased by 15.2%, primarily due to a significant rise of 156.8% in stock-based compensation [5]. - The Non-GAAP operating profit margin improved to 7.5%, up over 4 percentage points from the previous year, attributed to enhanced operational efficiency and resource utilization in the education business [5]. New Education Business Growth - The new education business segment saw a 21.6% year-on-year revenue growth, with non-academic tutoring courses launched in approximately 60 cities, attracting around 1.058 million students [5]. - The active paid user count for the smart learning system and devices reached approximately 352,000 [5]. - The cost structure of the new education business differs from traditional K12 training, allowing for lower marginal costs per student and improved resource efficiency through the OMO (online-merge-offline) model [5]. Market Demand Recovery - In the traditional core business, revenue from overseas exam preparation increased by about 4.1% year-on-year, showing improvement from a 1% increase in the previous quarter [6]. - Domestic exam preparation for adults and college students recorded a year-on-year growth of approximately 12.8% [6]. - The company has raised its full-year revenue guidance for fiscal year 2026 to a range of $5.3 billion to $5.5 billion, expecting a year-on-year growth of 11% to 14% in the third fiscal quarter [6]. Market Valuation - New Oriental's current price-to-earnings ratio is approximately 25.7 times, significantly higher than the 7.6 times of its competitor, China Education Group [7]. - This premium valuation reflects market expectations for growth, supported by visible profit recovery and cash flow improvement [7]. - If the new education and adult training businesses can continue to expand and maintain profit margin improvements, the current valuation may be justified [7].

Core Viewpoint - New Oriental reported a significant increase in its financial performance for the second quarter of fiscal year 2026, indicating strong growth across various business segments [1] Financial Performance - Net revenue reached $1.191 billion, representing a year-on-year increase of 14.7% [1] - Operating profit was $66.3 million, showing a substantial year-on-year growth of 244.4% [1] - Net profit attributable to shareholders was $45.5 million, up 42.3% compared to the previous year [1] Business Segments - Revenue from overseas exam preparation business grew by approximately 4.1% year-on-year [1] - Domestic exam preparation business for adults and college students saw a year-on-year increase of about 12.8% [1] - New education business achieved a year-on-year growth of 21.6% [1] Student Engagement - Non-academic tutoring courses have been launched in around 60 cities, attracting approximately 1.058 million students [1] - Smart learning systems and devices have been implemented in about 60 cities, with active paying users reaching 352,000 [1]

Core Viewpoint - New Oriental's financial performance for the second quarter of fiscal year 2026 shows significant growth, with net revenue increasing by 14.7% year-on-year to $1.191 billion, and operating profit rising by 244.4% to $66.3 million [1] Financial Performance - For the first half of fiscal year 2026, net revenue reached approximately $2.714 billion, a year-on-year increase of 9.7% - Operating profit for the same period was approximately $377 million, up 20.7% year-on-year - Net profit attributable to shareholders was approximately $286 million, reflecting a 3.2% year-on-year growth [1] Business Segments - Revenue from overseas exam preparation increased by approximately 4.1% year-on-year - Domestic exam preparation for adults and college students grew by about 12.8% year-on-year - New education business achieved a year-on-year growth of 21.6% - Non-academic tutoring courses have been launched in around 60 cities, attracting approximately 1.058 million students - The smart learning system and devices have been implemented in about 60 cities, with active paying users reaching approximately 352,000 [2] Strategic Initiatives - The company is focusing on enhancing core educational services, improving teaching quality and product standards, and optimizing cost structures and operational efficiency - A comprehensive cross-department customer service system has been initiated to enhance customer loyalty and retention, promote cross-department sales, and reduce customer acquisition costs [2] - The company is investing in AI technology and integrating it into existing educational products to improve operational efficiency and support for teaching teams [2] Shareholder Returns - The board has approved a cash dividend of $0.12 per ordinary share (or $1.20 per American Depositary Share), to be distributed in two installments as part of the fiscal year 2026 shareholder return plan - The first installment has been fully distributed, with the second installment to be announced later [3] Share Buyback Program - As part of the shareholder return plan, the company announced a share buyback program, authorizing up to $300 million in American Depositary Shares or ordinary shares over the next 12 months - As of January 27, 2026, approximately 1.6 million American Depositary Shares have been repurchased at a total cost of about $86.3 million [3] Future Outlook - The company expects net revenue for the third quarter of fiscal year 2026 (from December 1, 2025, to February 28, 2026) to be between $1.313 billion and $1.349 billion, representing a year-on-year growth rate of 11% to 14% [3]