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

[winston]

not vested

New Oriental Education & Technology Group (EDU US)
Diverse Revenue Streams; Margin Improvement In Sight

We note that demand for after-school education remains resilient despite a weaker macro outlook as peer competition in China remains intense.

To defend against potential uncertainties, EDU is cultivating a competitive moat by diversifying its
revenue streams and investing in East Buy.

Management guided 4QFY24 revenue growth of 28-31% yoy to US$1,101.5m-1,127.3m while overall net margin should expand 2-3ppt yoy in FY24.

Maintain BUY with a target price of US$105.00 (HK$82.00).

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

New Oriental Education & Technology Group (EDU US)

4QFY24: Earnings Miss; Impact From East Buy To Ease Off After 1QFY25

New Oriental’s 4QFY24 earnings missed expectations.

Revenue grew 32% yoy to US$1,136.7m, in line with the street’s estimate.

Non-GAAP net profit declined 41% yoy to US$37m, below our and consensus expectations.

Net margin dipped 4ppt yoy to 3% for 4QFY24.

EDU forecasts 1QFY25 revenue (excluding East Buy) rising 31-34% yoy to US$1,254.7m-1,283.5m, 2% below consensus estimate.

Maintain BUY with a lower target price of US$90.00 (HK$70.00), based on SOTP valuation.

Our target price implies 26x FY25F PE and 0.7x PEG vs a three-year EPS CAGR of 35%.

The company is currently trading at 20x forward PE, slightly below its five-year average PE.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

Education business maintains solid growth

New Oriental (EDU) reported a 32.1% yoy revenue increase in 4QFY5/24, mainly driven by its new education and livestreaming business, in line with our expectations.

Its 4QFY5/24 non-GAAP net profit fell by 40.5% yoy to US$36.9m, below our expectations, due to margin contraction and one-off expenses related to East Buy.

Management has guided for 31-34% education revenue growth and education nonGAAP OPM to expand by 200bp yoy (excluding East Buy) in 1QFY5/25F.

We reiterate Add given strong education growth with new DCF-based TP of HK$72.5.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... AD7DD1EA99

[winston]

not vested

<Research>HSBC Research Finds New Oriental (EDU.US) Shareholder Reward Policy Positive

HSBC Global Research noted in a report that New Oriental (EDU.US) shares have rallied, benefiting from a positive surprise from its shareholder reward policy, while the company said it is considering a special dividend.

The broker said this helps address investors' concerns about the company's recent poor earnings and corporate management, and that even if it takes some time for investors to regain confidence in the company's earnings, signs of continued improvement at its EAST BUY (01797.HK) subsidiary may help.

Related News: Macquarie Raises NEW ORIENTAL-S (09901.HK) TP to $71 as Quarterly Results Miss on One-off Expenses

HSBC maintained its target price on New Oriental's US shares at US$100, with a Buy rating.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

[winston]

not vested

<Research>M Stanley Positive on NEW ORIENTAL-S' Upsized Buyback & Potential Special Div., But Execution Needs to Be Monitored

Morgan Stanley expressed its positive position in its recent report on NEW ORIENTAL-S (09901.HK) 's upsized share buyback and potential special dividend distribution;

However, given the company's unsatisfactory share repurchase record, the broker believed that the execution of the plan needs to be closely monitored.

Morgan Stanley said that NEW ORIENTAL-S had only repurchased US$300 million worth of stocks in two years' time through 30 July, the progress of which was disappointing.

It also believed that the timing of the repurchase and special dividend announcement reflected the recent weakness in the company's stock price after the announcement of its weaker-than-expected results for 4QFY24, as well as the uncertain gross profit outlook.

Morgan Stanley set the TP for the company's US shares at US$79, with a rating of Overweight.

Source: AAStocks Financial News

[winston]

not vested

<Research>CICC Decreases New Oriental (EDU.US) TP to US$90; Educational Biz Margins May Rebound

CICC noted in a report that New Oriental Education & Technology (EDU.US) 's 4FQ24 revenue was in line with market expectations, but its non-GAAP net profit was significantly lower than forecasted.

Company management targeted revenue for 1FQ25 (June to September 2024) to be in the range of RMB1.2547 billion to RMB1.2835 billion, representing a YoY increase of 31%-34%, broadly in line with market consensus.

Taking into account the elimination of one-off effects such as salary incentives in the education business, CICC expected New Oriental's non-GAAP operating margins excluding EAST BUY (01797.HK) to increase by about 2 ppts YoY in 1FQ25, which included a loss of about RMB50 million from the cultural and tourism business.

Related News: BOCI Chops New Oriental Education & Technology (EDU.US) TP to US$99.41 as OPM Slightly Misses

Separately, CICC has lowered New Oriental's revenue forecasts for FY25 and FY26 by 1.8% and 0.7% to US$5.31 billion and US$6.63 billion respectively, and trimmed the group's non-GAAP net profit by 6% and 6.6% to US$549 million and US$742 million respectively, taking into account adjustments at EAST BUY.

CICC is optimistic about New Oriental's industry-beating growth prospects and profitability improvement in both existing and new businesses.

The broker maintained its Outperform rating and dropped its target price by 18% to US$90.

Related News: BOCOMI Cuts NEW ORIENTAL-S (09901.HK) TP to $80; 4QFY24 OPM Misses

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news

[winston]

not vested

Positive on education margin expansion

Due to weak consumption sentiment, we expect slower revenue growth for New Oriental’s premium 1x1 overseas test preparation classes in 1QFY5/25F.

We believe the overall demand for education services is still strong and New Oriental’s (EDU) revenue should grow 27% in 1QFY5/25F and 31% yoy in FY5/25F.

Although 1QFY5/25F overall net profit will be impacted by the one-off expenses related to East Buy, we expect education non-GAAP OPM to expand by 200bp yoy.

We reiterate Add given strong education growth, with new DCF-based TP of HK$74.1

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... C507E14531

[winston]

not vested

<Results>NEW ORIENTAL-S (09901.HK) 1FQ NP US$245M, Up 48.4% YoY

NEW ORIENTAL-S (09901.HK) 0.000 (0.000%) announced its 1FQ results ended August this year.

Its revenue came in at US$1.435 billion, up 30.5% YoY.

Operating income amounted to US$293 million, up 42.9% YoY.

Non-GAAP operating income was US$300 million, up 22.6% YoY.

Net profit reached US$245 million, up 48.4% YoY.

Non-GAAP net profit touched US$265 million, up 39.8% YoY.

EPS stood at US$0.15. Basic income per ADS was US$1.49.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... stock-news