Core Insights - New Oriental's 2QFY26 revenue reached $1.191 billion, a year-on-year increase of 14.7% [1] - The education business (including cultural tourism) generated $974 million, growing 13% year-on-year [1] - Other businesses, primarily Dongfang Zhenxuan, reported revenue of $217 million, up 22.9% year-on-year [1] - Non-GAAP net profit attributable to the parent company was $73 million, a 68.6% increase year-on-year, with a Non-GAAP net profit margin of 6.1%, expanding by 2 percentage points [1] Education Business Performance - The study abroad business revenue was $252 million, growing only 1% year-on-year, a slowdown of 29.3 percentage points compared to the same period last year [1] - The company is integrating study abroad training and consulting services while expanding its youth study abroad training offerings to enhance growth resilience [1] New Business Growth - New business revenue (K9 competency training and learning machine) grew 21.6% year-on-year to $366 million, indicating sustained high growth in non-subject competency services [2] - The number of teaching locations increased to 1,379, a 21% year-on-year growth, although the growth rate slowed by 2.7 percentage points compared to 1QFY26 [2] Profitability Improvement - Despite the slowdown in high-margin study abroad business, the increase in competency business margins offset this decline [2] - Non-GAAP operating profit margin expanded by 4.7 percentage points year-on-year to 7.5% in 2QFY26, showing an accelerating expansion trend [2] Future Outlook - The company has raised its revenue forecasts for FY26-FY28 to $5.5 billion, $6.11 billion, and $6.89 billion, respectively, from previous estimates of $5.38 billion, $5.98 billion, and $6.73 billion [3] - The company expects the pressure on profit margins from the study abroad business to clear soon, with a projected slowdown in the growth rate of teaching locations to 10% [3] - The target price has been adjusted to $72.4, maintaining a buy rating [3]

Core Viewpoint - Company maintains a "Buy" rating for New Oriental-S (09901) due to strong growth in education business and recovery in the Dongfang Zhenxuan segment, with revenue forecasts for FY26-FY28 adjusted to $5.5 billion, $6.11 billion, and $6.89 billion respectively [1] Financial Performance - In Q2 FY26, New Oriental reported revenue of $1.191 billion, a year-on-year increase of 14.7%, with education business (including cultural tourism) generating $974 million, up 13% [1] - Other businesses, primarily Dongfang Zhenxuan, contributed $217 million, reflecting a 22.9% year-on-year growth [1] - Non-GAAP net profit attributable to the parent company reached $73 million, a 68.6% increase year-on-year, with a Non-GAAP net profit margin of 6.1%, expanding by 2 percentage points [1] Study Abroad Business - The revenue from study abroad exam training and consulting in Q2 FY26 was $252 million, showing a year-on-year growth of 1%, but a slowdown of 29.3 percentage points compared to the previous year [2] - The company is integrating study abroad training and consulting services and expanding its target audience to enhance growth resilience in this segment [2] New Business Growth - New business segments, including K9 competency training and learning machine sales, saw a revenue increase of 21.6% to $366 million [3] - The number of teaching centers grew to 1,379, a 21% year-on-year increase, although the growth rate slowed by 2.7 percentage points compared to Q1 FY26 [3] Operating Profit Margin Improvement - Despite the slowdown in high-margin study abroad business, the increase in profitability from competency training offset this decline [4] - Q2 FY26 Non-GAAP operating profit margin expanded by 4.7 percentage points to 7.5%, with education business margin at 6.6%, up 3.5 percentage points year-on-year [4] - Other businesses, mainly Dongfang Zhenxuan, achieved a Non-GAAP operating profit margin of 13%, an increase of 12.4 percentage points year-on-year [4]

Investment Rating - The report maintains a "BUY" rating for the company [5][11] Core Insights - The company reported a revenue of USD 1.191 billion for 2QFY26, representing a year-over-year increase of 14.7%. The education business (including cultural tourism) generated USD 974 million, up 13% YoY, while other businesses (primarily EastBuy) saw revenue of USD 217 million, a 22.9% YoY increase [3][7] - Non-GAAP net profit attributable to shareholders was USD 73 million, surging 68.6% YoY, with a Non-GAAP net margin of 6.1%, expanding by 2 percentage points YoY [3][7] - The overseas study business growth has bottomed out, with revenue from overseas test preparation and consulting at USD 252 million, a 1% YoY increase, indicating a slowdown of 29.3 percentage points compared to the previous year [8][11] - New business segments, including K9 non-academic subject tutoring and learning tablets, achieved a revenue growth of 21.6% YoY to USD 366 million, with the number of learning centers increasing to 1,379, up 21% YoY [4][9] - Operating margins are improving, with the Non-GAAP operating margin expanding by 4.7 percentage points YoY to 7.5% in 2QFY26, driven by margin improvements in new businesses [10][11] Financial Data and Profit Forecast - Revenue forecasts for FY26-FY28 have been raised to USD 5.5 billion, USD 6.11 billion, and USD 6.89 billion, respectively, from previous estimates of USD 5.38 billion, USD 5.98 billion, and USD 6.73 billion [5][11] - Non-GAAP net profit forecasts for FY26-FY28 have been adjusted to USD 570 million, USD 629 million, and USD 700 million, respectively, up from previous forecasts of USD 555 million, USD 610 million, and USD 679 million [5][11] - The company is moderating its full-year learning center expansion pace to 10% to improve capacity utilization rates, indicating a strategic shift towards operational efficiency [11]

Investment Rating - The report maintains a "Buy" rating for New Oriental-S (09901) [2][7] Core Insights - New Oriental's revenue for 2QFY26 reached USD 1.191 billion, reflecting a year-over-year increase of 14.7%. The education business (including cultural tourism) generated USD 974 million, up 13% YoY, while other businesses (primarily EastBuy) saw revenue of USD 217 million, a 22.9% YoY increase. Non-GAAP net profit attributable to shareholders was USD 73 million, surging 68.6% YoY, with a non-GAAP net margin of 6.1%, expanding by 2 percentage points YoY [5][9] - The overseas study business growth has bottomed out, with revenue from overseas test preparation and consulting at USD 252 million, a 1% YoY increase, indicating a slowdown of 29.3 percentage points compared to the previous year [10] - New business segments, including K9 non-academic tutoring and learning tablets, showed robust growth with a 21.6% YoY increase in revenue to USD 366 million. The number of learning centers increased to 1,379, up 21% YoY [11] - Operating margins are improving, with the non-GAAP operating margin expanding by 4.7 percentage points YoY to 7.5% in 2QFY26. The education business's non-GAAP operating margin was 6.6%, up 3.5 percentage points YoY [12] Financial Data and Profit Forecast - Revenue forecasts for FY26-FY28 have been raised to USD 5.5 billion, USD 6.11 billion, and USD 6.89 billion, respectively. Non-GAAP net profit forecasts for the same period have also been increased to USD 570 million, USD 629 million, and USD 700 million [7][13] - The financial data for FY24 to FY28 indicates a steady growth trajectory, with revenue expected to grow from USD 4.314 billion in FY24 to USD 6.887 billion in FY28, and net profit increasing from USD 464 million to USD 700 million over the same period [16]

Investment Rating - The report maintains a positive outlook on the overseas education sector, particularly on New Oriental, with an investment rating of "Buy" [12]. Core Insights - New Oriental is expected to achieve revenue of $1.165 billion in 2QFY26, representing a year-on-year growth of 12.2%. The education business (including cultural tourism) is projected to generate $957 million, up 11% year-on-year, while other businesses (mainly Dongfang Zhenxuan) are expected to reach $208 million, growing 18% year-on-year. The Non-GAAP net profit attributable to the parent company is anticipated to be $63 million, reflecting a significant year-on-year increase of 77.8% [6][12]. - The report highlights a slowdown in the growth of the study abroad business, with expected revenue of $242 million in 2QFY26, down 3% year-on-year. This slowdown is attributed to high-end consumption challenges in the one-on-one exam preparation segment. The company is adapting by shifting from one-on-one to one-to-many class formats to lower per-class costs and expanding services to younger students [2][6]. - New business segments, including K9 competency training and learning machine services, are projected to grow by 21% year-on-year to $364 million in 2QFY26. The company aims to enhance operational efficiency and profit margins through improved utilization of existing teaching resources [3][7]. Summary by Sections Market Review - The education index increased by 2.8% during the week, outperforming the Hang Seng Index by 1.8 percentage points. Year-to-date, the education index has risen by 13.1%, lagging behind the Hang Seng Index by 9.18 percentage points [5]. Company Updates - New Oriental's revenue forecast for 2QFY26 is $1.165 billion, with a Non-GAAP net profit of $63 million and a Non-GAAP net profit margin of 5.4%, expanding by 2 percentage points year-on-year [6][12]. - The report notes a significant decline in the growth rate of the study abroad business, with a projected revenue decrease of 3% year-on-year [2][6]. - The new business segment is expected to maintain strong growth, with a projected revenue increase of 21% year-on-year [3][7]. Investment Analysis - The report recommends focusing on Hong Kong vocational education companies, particularly China Oriental Education, due to a rebound in vocational training demand and the company's proactive operational adjustments. It also suggests monitoring higher education companies as profitability is expected to improve [12].

Core Viewpoint - The company is expected to see a revenue increase of 12.2% year-on-year in Q2 FY26, driven by strong performance in its education and new business segments, despite challenges in its study abroad services [1][2]. Group 1: Financial Performance - Q2 FY26 revenue is projected at $1.165 billion, with education business (including cultural tourism) contributing $957 million, a growth of 11% year-on-year [1]. - Non-GAAP net profit is expected to reach $63 million, reflecting a significant year-on-year increase of 77.8%, with a Non-GAAP net profit margin of 5.4%, expanding by 2 percentage points [1]. - New business revenue (K9 competency training and learning machine) is anticipated to grow by 21% year-on-year to $364 million, indicating sustained high growth in non-academic sectors [2]. Group 2: Business Segments - The study abroad training and consulting business is expected to generate $242 million in revenue, a decline of 3% year-on-year, with a slowdown in growth rate compared to the previous year [1]. - The company is adapting its high-end one-on-one study abroad training model to a one-to-many format to lower costs and is expanding its youth study abroad training services to enhance growth resilience [1]. - The number of teaching locations is projected to increase to 1,368, a 20% year-on-year growth, although the growth rate has slowed by 3.7 percentage points compared to Q1 FY26 [2]. Group 3: Profitability and Efficiency - Despite the slowdown in high-margin study abroad business, the profitability of competency training is expected to offset this decline, leading to an improvement in overall operating profit margins [2]. - Non-GAAP operating profit margin is projected to expand by approximately 2 percentage points to 4.7% in Q2 FY26, indicating a trend of accelerating margin expansion [2]. - The education business's Non-GAAP operating profit margin is expected to reach 4.1%, with an increase of 0.9 percentage points year-on-year, while other businesses (mainly Dongfang Zhenxuan) are expected to achieve a Non-GAAP operating profit margin of 8%, up by 8.5 percentage points [2]. Group 4: Future Outlook - The company maintains revenue forecasts for FY26-FY28 at $5.38 billion, $5.98 billion, and $6.73 billion, respectively, with expectations of a recovery in profit margins as the study abroad business stabilizes [3]. - The target price is set at $69.9, corresponding to HKD 54.9 per share, with an upgrade to a buy rating reflecting confidence in the company's growth trajectory [3].

Core Viewpoint - The report from Shenwan Hongyuan maintains revenue projections for New Oriental-S (09901) for FY26-FY28 at $5.38 billion, $5.98 billion, and $6.73 billion, respectively, with expectations of profit margin pressure easing as the overseas study business stabilizes [1] Group 1: Financial Performance - Shenwan Hongyuan expects New Oriental's revenue for 2QFY26 to reach $1.165 billion, representing a year-on-year growth of 12.2% [2] - The education business (including cultural tourism) is projected to generate $957 million in revenue, up 11% year-on-year, while other businesses (mainly Dongfang Zhenxuan) are expected to achieve $208 million, growing 18% year-on-year [2] - The estimated Non-GAAP net profit attributable to the parent company for 2QFY26 is $63 million, reflecting a significant year-on-year increase of 77.8% [2] Group 2: Overseas Study Business - The overseas examination training and consulting business is expected to generate $242 million in revenue for 2QFY26, a decline of 3% year-on-year, with a slowdown in growth of 33.3 percentage points compared to the same period last year [3] - The high-end one-on-one overseas examination training business faces challenges due to its premium pricing, prompting the company to adjust its model to one-to-many classes to lower costs and expand its service offerings [3] - The growth rate of the overseas study training and consulting business is anticipated to bottom out in 2QFY26 [3] Group 3: New Business Growth - New business revenue, including K9 competency training and learning machine services, is projected to grow by 21% year-on-year to $364 million in 2QFY26, driven by strong growth in non-academic competency services [4] - The company plans to enhance its product matrix by offering competency classes in elementary school and subscription services for learning machines in middle school to meet differentiated training needs [4] - The number of teaching sites is expected to increase to 1,368, a year-on-year growth of 20%, although the growth rate has slowed by 3.7 percentage points compared to 1QFY26 [4] Group 4: Operating Profit Margin - Despite the slowdown in high-margin overseas study business, the increase in competency business margins is expected to offset this impact [5] - The company is implementing measures such as workforce optimization and cost control, leading to an anticipated expansion of Non-GAAP operating profit margin by approximately 2 percentage points to 4.7% in 2QFY26 [5] - The Non-GAAP operating profit margin for the education business is projected to be 4.1%, reflecting a year-on-year increase of 0.9 percentage points, while the margin for other businesses (mainly Dongfang Zhenxuan) is expected to be 8%, up 8.5 percentage points year-on-year [5]

Investment Rating - The report upgrades the investment rating of New Oriental-S (09901) to "Buy" [1][13] Core Insights - The report highlights an expected revenue of $1.165 billion for 2QFY26, representing a year-over-year increase of 12.2% [4][9] - The education business, including cultural tourism, is projected to generate $957 million, up 11% YoY, while other businesses, primarily EastBuy, are expected to contribute $208 million, reflecting an 18% YoY increase [4][9] - Non-GAAP net profit attributable to shareholders is anticipated to reach $63 million, surging 77.8% YoY, with a non-GAAP net margin forecasted at 5.4%, expanding by 2 percentage points YoY [4][9] Revenue and Profit Forecast - Revenue for FY26 is maintained at $5.38 billion, with projections for FY27 and FY28 at $5.98 billion and $6.73 billion, respectively [6][13] - Non-GAAP net profit forecasts for FY26, FY27, and FY28 are $555 million, $610 million, and $679 million, respectively [6][13] Business Segment Performance - The overseas study business is expected to see a revenue decline of 3% YoY to $242 million in 2QFY26, with growth challenges in high-end one-on-one services [5][10] - New business segments, including K9 non-academic subject tutoring and learning tablets, are projected to grow 21% YoY to $364 million [5][11] - The number of learning centers is expected to increase to 1,368, up 20% YoY, although the growth rate is moderating [5][11] Margin Improvement - Non-GAAP operating margin is forecasted to expand by approximately 2 percentage points YoY to 4.7% in 2QFY26, with the education business margin at 4.1% and other businesses at 8% [6][12]

Group 1 - The core viewpoint of the article highlights New Oriental's financial performance in Q4 FY25, with total revenue of $1.243 billion, representing a year-on-year growth of 9.4% [1] - The education business, including cultural tourism, generated $1.083 billion in revenue, showing a year-on-year increase of 18.7% [1] - The company's Non-GAAP net profit attributed to the parent company was $98 million, up 59.4% year-on-year, with a Non-GAAP net profit margin of 7.9%, expanding by 2.5 percentage points year-on-year [1] Group 2 - The study abroad business is experiencing a slowdown, with revenue from overseas exam training and consulting reaching $315 million, a year-on-year growth of 11%, which is a deceleration of 6.5 percentage points compared to the same period last year [1] - The company is adjusting its one-on-one training model to a one-to-many format to lower class prices and is expanding its services to include youth overseas exam training to enhance growth resilience [1] Group 3 - New business segments, including K9 competency training and learning machine services, saw a revenue increase of 32.5% to $307 million, driven by sustained high growth in non-subject competency services [2] - The company plans to expand its educational network to 1,318 locations, a year-on-year increase of 28.6%, indicating continued high growth [2] - The Non-GAAP operating profit margin for the education business is expected to expand by approximately 4.1 percentage points to 6.5% in Q4, reversing the declining trend from Q3 [2] Group 4 - Due to the slowdown in education business growth, the company expects Q1 FY26 revenue to grow only 2-5% year-on-year, with an annual growth forecast of 5-10% [3] - The company has revised its revenue forecasts for FY26 and FY27 to $5.28 billion and $5.79 billion, respectively, down from previous estimates [3] - The DCF target price has been lowered to $53.4, corresponding to a PE ratio of 15.6x for FY26 and a PEG ratio of 1.64x [3]

Investment Rating - The report downgrades the investment rating to "Hold" due to the slowdown in the education business growth [7] Core Views - The company's 4QFY25 revenue reached $1.243 billion, a year-on-year increase of 9.4%, with the education business (including cultural tourism) generating $1.083 billion, up 18.7%. Other businesses, primarily Oriental Selection, saw a revenue decline of 28.5% [4] - The company announced a three-year shareholder return plan, committing to return at least 50% of adjusted net profit to shareholders through dividends or buybacks [4] - The study predicts that the growth rate of the study abroad examination training and consulting business will gradually bottom out, with 4QFY25 revenue of $315 million, a year-on-year increase of 11%, but a slowdown compared to the previous year [5] - New business segments, including K9 competency training and learning machine services, showed strong growth, with 4Q revenue increasing by 32.5% to $307 million [5] - The report anticipates a continued improvement in operating profit margins, with Non-GAAP operating profit margin expanding by approximately 4.1 percentage points to 6.5% in 4Q [6] Financial Data and Profit Forecast - FY24A revenue was $4.314 billion, with a year-on-year growth rate of 43.89%. FY25A revenue is projected at $4.9 billion, with a growth rate of 13.60% [8] - The adjusted net profit for FY24A was $464 million, with a year-on-year growth of 79.20%. For FY25A, the adjusted net profit is expected to be $517 million, a growth of 11.40% [8] - The report revises FY26 and FY27 revenue forecasts to $5.28 billion and $5.79 billion, respectively, down from previous estimates of $5.8 billion and $7.03 billion [7] - The DCF target price is adjusted to $53.4, corresponding to a target price of HKD 41.9 per share, with a PE ratio of 15.6x for FY26 [7]