New Oriental Education 9901; US: EDU

[winston]

not vested

<Research>Macquarie Trims NEW ORIENTAL-S TP to $67.2; ST Margin Diluted

NEW ORIENTAL-S (09901.HK)s 3QFY24 Non-GAAP OP margin was flat YoY, jeopardized by EAST BUY (01797.HK) 's gross margin and marketing investments, Macquarie issued a report as saying.

The management of NEW ORIENTAL-S is targeting a 30% YoY hike in learning center capacity in FY24, vs the previous target of 20%.

The report said NEW ORIENTAL-S's management is targeting 28-31% YoY revenue growth in 4QFY24, with growth easing due to a high base.

The company is looking to invest more in incentives to motivate teachers and increase its workforce to 70,000 from 55,000 previously, which will impact education margin in 4QFY24.

Related News: Citi Surges NEW ORIENTAL-S (09901.HK) TP by 90% to $99, Rates Buy

Macquarie said NEW ORIENTAL-S' short-term margin was diluted, and thus lowered its TP for its H shares to $67.2 from $75.

The broker cut its Non-GAAP NP for FY24-26E by 15%/11%/5% to reflect lower gross margin expectations.

The Outperform rating was maintained.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

not vested

<Research>M Stanley Reduces TP of New Oriental (EDU.US) to US$87; EAST BUY (01797.HK) Drags Margins

Morgan Stanley commented in a report that NEW ORIENTAL-S (09901.HK) 's increased investment in EAST BUY (01797.HK) has led to margin compression in 3FQ24, which will continue to affect 4FQ24 and FY25.

However, the broker expected NEW ORIENTAL's education business to maintain strong growth and profit expansion in the next financial year.

The broker lowered its earnings forecast on NEW ORIENTAL for FY24-FY26 by 13-14%.

Morgan Stanley also dropped its target price on NEW ORIENTAL's American Depositary Receipts (EDU.US) to $87 from $95, but maintained its Overweight rating as the company's valuation remained attractive after the price adjustment.

Morgan Stanley explained that its profit forecast cut on NEW ORIENTAL is mainly reflective of the drag on margins from EAST BUY, but the improvement in revenues and margins of NEW ORIENTAL's core education business remained unchanged.

The broker believed that leading education organisations such as NEW ORIENTAL would benefit from a stable regulatory environment for education, as well as a lack of supply of quality education due to strong demand.

This trend is expected to continue over the next 2-3 years. Supply and demand dynamics in the education sector are more favourable than in other sectors.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN