Summary of New Oriental Education & Technology (EDU) Conference Call Company Overview - Company: New Oriental Education & Technology (EDU) - Industry: China Education - Stock Rating: Equal-weight - Price Target: US$47.00 - Current Price: US$50.98 (as of September 24, 2025) - Market Capitalization: US$85,111 million - Fiscal Year Ending: May 2026 Key Points and Arguments 1. 1QF26 Revenue and OPM Guidance: Management expects to exceed the high end of its previous revenue guidance (up 2-5% year-over-year) and OPM guidance (0-0.5 percentage points year-over-year) due to better-than-expected overseas revenue, which is projected to decline between -5% to 0% year-over-year, compared to previous guidance of -5% [2][4][9] 2. F2026 Outlook: The company aims to improve shareholder returns by returning no less than 50% of GAAP net profit over the next three years, with 50% allocated to dividends and the remainder to share buybacks [4] 3. Earnings Forecast: Non-GAAP operating profit is forecasted at US$586 million (11.1% OPM) and non-GAAP net profit at US$549 million (10.4% NPM) [9] 4. Revenue Breakdown: High school revenue is expected to grow by 10-12% year-over-year, while K9 revenue is projected to increase by 20% year-over-year, indicating a re-acceleration in the second quarter of fiscal 2026 [9] 5. Cost Control Measures: Management anticipates that cost control efforts and improvements in K9 and profitable East Buy will help offset the drag from the overseas business, leading to a stable OPM year-over-year [9] 6. Valuation Methodology: The valuation is based on a discounted cash flow (DCF) model, with a weighted average cost of capital (WACC) of 14% and a terminal growth rate of 3% [10] 7. Market Risks: Potential risks include intensified competition, low visibility in revenue/earnings from live-streaming e-commerce, and possible regulatory changes affecting high school and non-academic tutoring sectors [12] Additional Important Information - Earnings Growth: The company is expected to achieve an 8.4% earnings compound annual growth rate (CAGR) from fiscal 2026 to 2029 [4] - Stock Performance: The stock has a 52-week range of US$87.11 to US$40.70, indicating significant volatility [6] - Analyst Team: The report is prepared by a team including Eddy Wang, CFA, and Gary Yu, Equity Analysts at Morgan Stanley [5] This summary encapsulates the essential insights from the conference call regarding New Oriental Education & Technology, highlighting its financial outlook, strategic initiatives, and market conditions.
新东方：2026 财年第一季度展望-好于预期，但海外业务疲软仍存隐忧