Recently, New Oriental Education & Technology Group, two Chinese education giants listed in the United States, have released their financial results one after another. The performance of the two giants is clearly divided:
On one side is the sea water: New Oriental Education & Technology Group fell sharply after releasing the financial report.9%。
New Oriental Education & Technology Group's financial results for the second quarter of fiscal year 2018 ended November 30, 2017:Q2 of fiscal year 2018Net income exceeds467 million U.S. dollars, an increase of 36.9 percent over the same period last yearRevenue growth was higher than expected, but net profit growth was not satisfactoryNet profit4.3 million US dollars, down 58.7% from the same period last year.
On one side is the flames: TAL Education Group rose sharply after releasing the financial report.17.7%。
The financial results announced by TAL Education Group show that TAL Education Group as of11月30Revenue growth in the third quarter compared with the same period last year66.3%至4.33Net profit increased over the same period last year.198.4%至4070Ten thousand dollars.
The performance of the duo in the education industry goes up and down at a time. It doesn't just make people think.Is it New Oriental Education & Technology Group or TAL Education Group? Or is TAL Education Group's future really good?
Put it into investment. We should not only analyze the problem from the two single-quarter results, but also look at New Oriental Education & Technology Group's future fundamentals and prospects from a long-term perspective.
Whether to copy the bottom or chase the rise, New Oriental Education & Technology GroupOr TAL Education Group, this is a problem.
New Oriental Education & Technology Group, who loves and kills each other, is in harmony with the future.
At the GES 2017 Education Conference in November 2017, two of the guests, Yunji Inc, a big name in the education circle, especially deserved attention. As the "grand finale" on the closing day of the conference, Yu Minhong from New Oriental Education & Technology Group and Zhang Bangxin from TAL Education Group gathered together again and said.
At the meeting, the conversation between the two men was very interesting. Yu Minhong said: "I'm not sure whether Bangxin likes me or not.But I really like Bangxin. Zhang Bangxin's response was: "I can't like Mr. Yu. I worship him."". Looking back at the two people who "sympathize with each other", their experiences have a lot of overlap. For example, both of them are from Jiangsu and used to study at Peking University. They are now at the helm of two of China's largest education groups.
Yu Minhong once said: "for me, New Oriental Education & Technology Group has no competitors for a long time, and it is very painful to have no competitors." Zhang Bangxin is 18 younger than Yu Minhong.Ten years old, it is worthy of the name"80" entrepreneur, this opponent let Yu Minhong wait. Before TAL Education Group went public, in terms of the size of the company, the scope of business and the coverage of the city, both of them were not on the same order of magnitude. The listing in 2010 put TAL Education Group on the wings of capital and soared into the sky in only seven years, 2017.年On July 28th, TAL Education Group's market capitalization surpassed New Oriental Education & Technology Group for the first time. Since then, the two began to "catch up with each other", and the market capitalization rose alternately.
Today, the TAL Education Group market has surpassed New Oriental Education & Technology Group with a market capitalization of 16.8 billion US dollars, while New Oriental Education & Technology Group's market capitalization is slightly lower than TAL Education Group's, with a market capitalization of 14.9 billion US dollars.
New Oriental Education & Technology Group and the future, the two education giants rooted in mainland China, one is to do foreign language training abroad, the other is to do extracurricular training in the Mathematical Olympiad, if the two are content with their own track, there will be no intersection. Coincidentally, they all have a crush on China K12.The broad development space of the teaching assistant market.
Since then, they have entered the stage of falling in love and killing each other. Fortunately, the market is big enough for the next two giants to swim freely in the ocean of education.
Monthly chart of TAL Education Group's stock price
Monthly chart of New Oriental Education & Technology Group's stock price
Over the past year, the shares of the two education leaders have also risen on the wind, rising 140% and 150% respectively, and their market capitalization has broken through the 100 billion yuan mark, overlooking the entire private education industry in China. Bright Scholar Education Holdings Ltd, who ranks third in market capitalization, is no more than 10 billion yuan.
二、K12TAL Education Group's overtaking and New Oriental Education & Technology Group's pursuit on the track of
If you still think New Oriental Education & Technology Group is an English study abroad training institution, then you are tooNa ï ve. New Oriental Education & Technology Group from 2001The layout began in 2000.K12 extracurricular tutoring, choose to start with their own familiar English training, set up college entrance examination English tutoring classes to provide English remedial courses for senior high school students (and at this time, there are still two years before Zhang Bangxin founded TAL Education Group, New Oriental Education & Technology Group has obvious advantages). Since then, with the gradual saturation of the English study abroad market, New Oriental Education & Technology Group will focus on K12.On the track, its Youneng Middle School and Bubble Children have become its two pillars of growth.
However, TAL Education Group became the brightest star on the K12 track. In the past year, TAL Education Group not only overtook New Oriental Education & Technology Group in terms of market capitalization, but also surpassed New Oriental Education & Technology Group for the first time in terms of revenue from K12 education and tutoring business.
New Oriental Education & Technology Group and Future K12 in fiscal year 2010-2017Revenue from teaching and auxiliary business (millions of US dollars）
Revenue surpasses, on the one hand, due to TAL Education Group's rapid revenue growth. In the fiscal year 2011-2017, TAL Education Group's operating income achieved a compound annual growth rate of 45.4%, 23.8 percentage points higher than that of New Oriental Education & Technology Group.。
I have to say, it was New Oriental Education & Technology Group, who was conservative and stuck in a quagmire, that gave TAL Education Group a chance to fight back. So, what quagmire did New Oriental Education & Technology Group get into?
1.Only pay attention to the training before the college entrance examination
New Oriental Education & Technology Group launched K12 after discovering the rigid demand for high school entrance examination training.Business, almost all bet on the training ahead of the senior high school entrance examination. It is true that this model helped New Oriental Education & Technology Group occupy a certain market share in the early stage, but to become bigger and stronger still depends on the transmission of word-of-mouth.
Parents are usually cautious about their children's education, there are no trial and error opportunities in education, and acquaintance recommendations are usually more likely to win the trust of parents. In the education industry, word-of-mouth is usually spread horizontally, so it is difficult to pass it down.For example, if a student thinks an educational institution is good, he will usually recommend it to his classmates, and New Oriental Education & Technology Group's model is obviously not conducive to the transmission of word-of-mouth.
2.Taipan+ famous teacher mode in K12Is not satisfied with the soil and water on the track.
The mode of "big class + famous teacher" is the "killer's mace" of New Oriental Education & Technology Group's English training for studying abroad. But when New Oriental Education & Technology Group moved the system to K12When it comes to education, there are varying degrees of disobedience. Why is that? On the one hand, English training for studying abroad is, to some extent,"one hammer" business, users generally participate in the first phase is enough, while K12 training requires a long flow of water, pay attention to the continuation rate. On the other hand, the English training of studying abroad has a strong purpose, and the self-driving force of the group is very strong, while K12The training is for primary and middle school students. The educational services provided to this group should pay more attention to experience and interaction. In contrast, TAL Education Group's small class model is more appropriate.
Looking back on the future development trajectory, I have to admit that TAL Education Group has been rooted in K12 since the beginning of the Mathematical Olympiad training in primary school.In the field of training, it is done in the body.K12 extracurricular tutoring genes. Seeing that the former "little brother" is now on an equal footing with himself, even Yu Minhong has to admit. "New Oriental Education & Technology Group has learned a lot from learning and thinking. For primary and secondary education, we don't know what to do if we don't learn.”。
Judging from the revenue of New Oriental Education & Technology Group above, New Oriental Education & Technology Group 2012Fiscal year toThere was a difficult time in fiscal year 2015, when revenue growth slowed and even posted a loss in the second quarter of fiscal 13.
"pain is through", New Oriental Education & Technology Group, who learned from the bitter experience, started the reform. after a painful period of reform, New Oriental Education & Technology Group's revenue growth began an upward trend. What on earth did New Oriental Education & Technology Group learn from TAL Education Group?
1) the focus of business has shifted from the third year of junior high school to the first year of junior high school. Grasp the entrance of the source of students, emphasize the continuation rate, and quantify the continuation rate as the teacher's performance appraisal.
2) weaken the large class model, develop small class education, and increase the learning experience in the classroom.
3) TAL Education Group invented the dual-division model, while New Oriental Education & Technology Group carried it forward. The dual-division model can give full play to the advantages of New Oriental Education & Technology Group's famous teachers, and the online famous teacher + offline tutoring mode is conducive to New Oriental Education & Technology Group's rapid expansion in second-and third-tier cities. Judging from the distribution of learning centers, the number of learning centers in New Oriental Education & Technology Group's first-tier cities accounts for only about 25%, while more than half of TAL Education Group's learning centers are located in first-tier cities.
It is said that the enemy is the best teacher, which is perfectly shown in New Oriental Education & Technology Group. TAL Education Group is New Oriental Education & Technology Group's most respectable opponent.
Third, what does the latest financial report of New Oriental Education & Technology Group and TAL Education Group explain?
After understanding the process of the two education giants falling in love and killing each other, it is not difficult to understand the reasons for the differences when we take a look at the latest financial reports.
To interpret New Oriental Education & Technology Group's latest financial report for the next quarter, we should analyze it under the framework of the entire development strategy of the two companies.The growth model of educational counseling institutions includes endogenous growth and epitaxial growth. Endogenous growth is mainly through the promotion of existing learning centers.+ increasing the renewal rate has brought about an increase in the number of students, while extension growth has been maintained mainly through the opening of new learning centers.
The costs of education companies mainly include teachers' costs, rental costs, sales expenses and management expenses, among which the proportion of sales expenses to revenue does not change much from year to year. Under the premise of improving the utilization rate of the stock learning center, the endogenous growth model will improve the utilization rate of teachers and venues, and reduce the proportion of management costs in the total revenue. Under the extension growth model, a new learning center will be opened.Due to the need for additional classrooms during the reporting periodIt will take 2-3 quarters to complete the preliminary preparatory work such as decoration, Sanwei and recruitment before it can be put into use. in the first two or three years, the utilization rate is not high, and the new learning center which does not break through the break-even point will inevitably drag down the overall profitability of the group.
New Oriental Education & Technology Group and his future expansion model presents an obvious alternating form of endogenesis and extension. Nowadays, they are entering different stages of development.
New Oriental Education & Technology Group is in the period of epitaxial expansion.
According to New Oriental Education & Technology Group's financial reportThe company has entered a period of epitaxial high-speed expansionThe first ofThree quarters.The income growth initiated by FY15Q2-17Q3 mainly comes from the endogenous growth, that is, the increase in the utilization rate of the original learning center and the increase in the continuation rate. Since 17Q4, the growth of learning centers has been high for three consecutive quarters.This quarter, the company added a total of37 learning centers.
The company's K12 person-time growth rate (52% year-on-year growth) is faster than the expansion growth rate (20% year-on-year increase in teaching points and 38% year-on-year increase in classroom area), indicating that its overall utilization rate is increasing. And the increase in the utilization rate of the stock learning center can cover the low utilization rate of the incremental learning center. At present, the average utilization rate of the learning center of New Oriental Education & Technology Group Group is at 20%, and it is expected to grow steadily every year in the future.
The expansion and utilization of the school led to the growth of the number of students, K12Increase in the number of business excellent secondary schools49%, bubble children increased by 55%, and the two major businesses contributed 90% of the overall increase in the number of people. Passenger growth drove K12 revenue up 47%, the best level in single-quarter history.
According to New Oriental Education & Technology Group's existing deferred income, it has increased by 49% this quarter, and there is a great certainty that revenue will remain high in the future.
The decline in net profit is mainly due to higher operating costs and expense growth (YOY=40.8%) than revenue growth resulting from epitaxial expansion. Among them, management expenses increased by 44.2% over the same period last year, which is the most important factor driving down the profit margin of the current period. It is also easy to understand that, generally speaking, the newly opened school is the first for managers and administrators to move in, and then to recruit teachers, followed by enrollment.
TAL Education Group entered a period of endogenous growth
In contrast to TAL Education Group's development, 2017FY3Q-2018FY1Q, the company has added more than 1000 small classrooms every quarter, a year-on-year growth rate of more than 60%. 2018Q2和Q3, the growth rate slowed down obviously, and TAL Education Group changed from epitaxial expansion to endogenous growth.
2018FY1Q-3Although the expansion rate of the learning center has obviously slowed down, relying on the good reputation accumulated, the utilization rate of TAL Education Group's existing learning center has rebounded rapidly, boosting the growth of enrollment.86%. Revenue growth in the last two quarters continued the previous high growth rate of more than 60%.
Deferred revenue for the current period increased by 58% over the same period last year.It shows that there is a great certainty of high revenue growth in the future.
TAL Education Group, who entered the performance release period, saw an increase in net profit of 198% in the current financial quarter. It is particularly noteworthy that management expenses only increased by 49% compared with the same period last year, contributing to the growth of net profit. The proportion of revenue decreased by 3 percentage points to 24.9%. This is mainly due to the gradual rebound in classroom utilization and the improvement of operational efficiency.
Combined with the previous analysis, New Oriental Education & Technology Group and good future development trajectory gradually clear, for the latest quarter of the two companies' results you will not be so surprised. According to New Oriental Education & Technology Group's plan, it will increase by 50% and 80% in the next two quarters.For the new learning center, New Oriental Education & Technology Group, who is in an extensive expansion, will still be under pressure in the future, but with the improvement of the utilization rate of the school, the profit pressure decreases; TAL Education Group, who has entered the endogenous growth, has passed the labor pains period and entered the performance release period. while future revenue maintains high growth, profit margin growth will be significantly higher than revenue growth.
There are too many factors affecting net profit. For a company of such a size as New Oriental Education & Technology Group, any non-recurring profit or loss can greatly offset the rate of change of net profit. Therefore, for the enterprises in the extension expansion, the expansion speed is better than the profit margin growth; while for the enterprises in the endogenous growth, it may be a better choice to examine their profitability after expansion.
Conclusion
This time, as soon as New Oriental Education & Technology Group reconciled his future financial results, the extreme differentiation between a sharp fall in stock prices and a sharp rise in stock prices is to a large extent the result of market sentiment fermentation. in fact, New Oriental Education & Technology Group is still that New Oriental Education & Technology Group and TAL Education Group is still that TAL Education Group.
In the future, the education industry will still be the world of New Oriental Education & Technology Group and the future, as the saying is often said: the eldest and the second fight, as a result, everyone else died.